Artificial Intelligence in Augmented Reality Market | 2031

Report Description

The global artificial intelligence (AI) in augmented reality market size was valued at USD XX billion in 2022 and is likely to reach USD XX billion by 2031, expanding at a CAGR of XX% during 2023 – 2031. The market's growth is attributed to growing demands for artificial intelligence-powered augmented reality solutions across industries.

Increasing demand for realistic and responsive games is resulting in the higher integration of artificial intelligence (AI) in augmented reality (AR) technology to create intelligent virtual characters and dynamic scenarios for gameplay. 

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In gaming, AI-powered characters respond intelligently to players' actions, making gameplay engaging and challenging for an enhanced gaming experience. The growing advancement in AI coupled with emerging VR solutions for various industrial applications is projected to fuel the market in the coming years.

• On March 7, 2023, Niantic, Inc. software development company, announced the launch of Peridot, an artificial intelligence-driven pet simulation game that is set in the real-world using argument reality. This game allows its users to bond with digital pets by playing fetch, teaching tricks, and taking photos and videos.

Artificial Intelligence in augmented reality is used to combine advanced computer algorithms and processes into AR applications. Object recognition, spatial mapping, and real-time tracking are tasks that perform AI-driven AR. This is essential for applications such as navigation, gaming, training, and design. Additionally, artificial intelligence technology improves augmented reality experiences for users by enabling computers to understand and respond to real-world contexts.

The research report finds that the COVID-19 pandemic boosted the market. The pandemic accelerated the adoption of AI-driven augmented reality technologies in various sectors. Businesses and educational institutions use this technology for remote collaboration, virtual training, and interactive customer engagement. Furthermore, e-commerce utilizes AI-powered AR applications for customers to visualize products in their physical space in real time before purchasing.

Artificial Intelligence (AI) in Augmented Reality Market Dynamics

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Major Drivers

Increasing integration of artificial intelligence-powered augmented reality technologies in the healthcare industry is expected to drive the market. Medical professionals utilize AI's ability to visualize critical information during medical procedures to analyze patients' conditions. This helps to make precise decisions and contributes to better patient outcomes. Moreover, the use of AI-driven AR simulations for the training and education of medical students is further boosting the market.

Existing Restraints

High cost of high-quality hardware required for AR experiences is expected to hinder the market in the coming years. These technologies need robust computational power to handle AI processing, which makes these solutions relatively expensive. Moreover, the cost factors also affect the widespread adoption of this technology particularly in limited budget sectors.

Emerging Opportunities

Ongoing advancement in AI-driven augmented reality technology to utilize in educational and training sectors is likely to create immense opportunities for the players competing in the market. These technologies are helping to create personalized learning experiences by tailoring educational content. Additionally, the growing demand for AI-based augmented reality solutions in mobile devices is propelling the market.

• According to the reports, mobile augmented reality users worldwide in 2022 were 1.1 billion, and this number is expected to increase to 1.7 billion by 2024.

Scope of Artificial Intelligence (AI) in Augmented Reality Market Report

The report on the market includes an assessment of the market trends, segments, and regional markets. Overview and dynamics have also been included in the report.

Artificial Intelligence (AI) in Augmented Reality Market Segment Insights

Type Segment Analysis

Based on type, the artificial intelligence (AI) in augmented reality market is divided into hardware and software. The hardware segment is expected to hold a major market revenue share during the forecast period due to increasing demand for AR glasses, headsets, cameras, sensors, and processors.

These components are important for capturing real-world information which processes AI algorithms and display augmented content seamlessly. Furthermore, the increasing advancement in AI-powered AR technologies further contributes to the growing need for reliable hardware in the market.

• In March 2023, Ostloong Innovation, a Swiss startup, announced the launch of augmented reality headset LYRA. This new product is equipped with AI technology to enhance its AR capabilities. LARA has various features, such as navigation, a music player, a language translator, and mobile data integration.

The software segment is anticipated to register a robust growth rate, owing to the importance of artificial intelligence-driven software for recognizing objects, gestures, and surrounding environments. This allows augmented reality applications to respond intelligently and accurately. Furthermore, the increasing demand for AI-based software across various sectors to improve their AR capabilities is fueling the growth of this segment in the market.

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Technology Segment Analysis

On the basis of technology, the market is classified as machine learning & deep learning, natural language processing, and others. The machine learning & deep learning segment is estimated to hold a key market share during the projected period, as these technologies are excelling in the training systems to recognize patterns, understand context, and make intelligent decisions.

This offers accurate and responsive virtual overlays of the real world. Moreover, machine learning and deep learning technologies continually improve their ability to understand and respond to the complexities of the real world which further contributes to the growth of this segment in the market.

Display Segment Analysis

In terms of display, the artificial intelligence (AI) in augmented reality market is fragmented into head-mounted display, smart glass, head-up display, and handheld devices. The head-mounted display is anticipated to hold a major market revenue share during the forecast period, as they are widely used to deliver immersive and interactive experiences of augmented reality enhanced by artificial intelligence.

They overlay digital content onto the user's real-world view creating a seamless integration of the virtual and physical worlds. Moreover, the ongoing development to make these headsets affordable is propelling the market.

The smart glass segment is projected to register a considerable CAGR during the forecast period. They improve the individual's virtual reality experience without the use of bulky traditional head-up or -mounted displays.

Smart glasses with AI-powered AR help to enhance productivity and efficiency by offering real-time information in a hands-free manner. Furthermore, with the continued advances in AI, these glasses become intelligent and possible to implement across industries, which contributes to the growth of the AI in AR market.

• On May 31, 2023, Vuzix Corporation announced a partnership with TeamOpenSmartGlasses which is developing applications based on ChatGPT AI for Vuzix smart glasses. A suite of conversation enhancement tools being developed are designed for full-day wear smart glasses and aim to improve meetings and conversations with live information that enhances the user's understanding. These tools are designed for executives, technologists, academics, and more.

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Application Segment Analysis

Based on application, the market is divided into education, gaming, retail & advertising, healthcare, automotive, defense & military, and others. The healthcare segment is expected to grow at a significant CAGR in the market in the coming years, as artificial intelligence is used to enhance AR technology for medical applications.

These technologies assist surgeons in the visualization of the patient's anatomical information. This real-time guidance enhances accuracy and reduces the risks during complex operations. Moreover, the growing adoption of AI-integrated AR into telemedicine and remote consultations further boosts the market.

The industrial & manufacturing segment is projected to register a considerable CAGR during the forecast period, due to the rising demand for AI-powered augmented reality solutions to enhance the accuracy and safety of manufacturing processes.

AR devices are integrated with AI algorithms for real-time guidance during complex assembly. This assistance helps to reduce errors and improve worker capabilities. Furthermore, industries are heavily investing in AI-driven AR to improve their manufacturing efficiency, which contributes to fueling the growth of the market.

Regional Analysis

In terms of region, the global artificial intelligence (AI) in augmented reality market is segmented into Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. North America is expected to dominate the market during the forecast period, owing to the strong presence of technological innovation hubs and major tech companies in the region.

The United States houses renowned technology giants at the forefront of AI and AR development and innovation. Moreover, supporting government initiatives and policies to research AI-based augmented technology further boosts the market in this region.

Asia Pacific is anticipated to expand at a rapid pace in the global market in the coming years due to rapid technological advancement and digital transformation. Asia Pacific's growing manufacturing sector also presents opportunities for AI in AR applications. Industries such as manufacturing and logistics are integrating AI-powered AR tools to enhance quality control and productivity, which is further supporting the growth of the market in the region.

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