The AI Market HUGE – Bottom Up Analysis
Produced by Priory House Partners — PrioryHouse.com
The Insatiable Demand for AI Tools
This report examines the explosive and unrelenting growth in demand for AI-driven tools — a market already exceeding $ 350 bn in 2025 and projected to expand toward $ 700–800 bn by 2028. It explores how AI adoption across software, infrastructure, and operations is transforming business models, creating both new revenue layers and deep structural cost efficiencies. The following sections break down these effects by industry, monetization model, and their cumulative impact on GPU infrastructure demand.
Introduction & Market Scope
AI monetization is expanding faster than expected across industries. 2025 AI tools revenue of $ 350 bn is projected to reach $ 700–800 bn by 2028, with ~40% captured by GPU infrastructure (≈ $ 280–320 bn).
AI Revenue Split by Industry (2028)
Industry Totals (Incremental AI Tools Revenue, $B)
| Industry | Incremental AI ($B) |
|---|---|
| Enterprise / SaaS | 73 |
| Transport / Energy / Infrastructure | 65 |
| Government / Military | 53 |
| Ecommerce / Retail | 49 |
| Finance / Insurance | 32 |
| Healthcare | 29 |
| Education | 16 |
Monetization Models Across Segments
Software / SaaS Sector – Add-On Module Model
Vendors integrate AI into existing platforms as modular upgrades (e.g., copilots, anomaly detection, predictive reporting). Fast to deploy, scalable, and capital-light.
- AI tier or “Pro” subscription plan
- Usage-based charges (API calls, inference tokens)
- Feature-based upsells inside enterprise suites
Example: productivity SaaS adding summarization, design, or code-generation modules with 15–25% premium pricing.
Industrial / Infrastructure – AI as a Cost Option
Sold as efficiency enhancements integrated into existing control/data systems to improve reliability, energy use, and logistics.
- Predictive maintenance for fleets and energy grids
- Route and load optimization in logistics
- Smart forecasting in utilities or construction
Typical pricing: recurring license uplift or analytics subscription (~5–10%).
Cost-Saving Models – Human Replacement at Lower Cost
AI substitutes human analysis/processing at lower cost; monetization via throughput or per-transaction pricing.
- Insurance / Health claims: automated review, adjudication, fraud detection
- Credit scoring: instant AI risk modeling replacing manual underwriting
- Medical scanning & test results: automated radiology/lab interpretation
- Drug discovery: generative compound screening accelerating R&D
- Customer service: conversational agents replacing Tier-1 call centers
These substitutions expand compute demand and model training cycles, sustaining GPU utilization even in cost-cutting environments.
E-commerce – AI Uplift on Take Rates ($ 49 bn)
On mobile, scroll left/right to view all columns.
| Segment | Base Market ($B) | AI Adoption (%) | Incremental AI Rev ($B) |
|---|---|---|---|
| Retail media & sponsored listings | 240 | 8.5 | 20 |
| Dynamic pricing & recommendation | 120 | 7.5 | 9 |
| Fulfilment & logistics | 160 | 6.0 | 10 |
| Customer support & personalisation | 80 | 7.5 | 6 |
| Fraud & trust management | 45 | 10.0 | 4 |
Enterprise SaaS – Productivity & Analytics ($ 73 bn)
On mobile, scroll left/right to view all columns.
| Segment | Base Market ($B) | AI Adoption (%) | Incremental AI Rev ($B) |
|---|---|---|---|
| Productivity & collaboration | 230 | 7.5 | 17 |
| Engineering / design software | 170 | 7.5 | 13 |
| Data / analytics / BI | 230 | 7.5 | 17 |
| CX / CRM / marketing automation | 260 | 7.5 | 20 |
| ERP / HR / ITSM | 90 | 6.5 | 6 |
Conclusion
The market for AI is immense—far larger than broadly appreciated—because AI is becoming pervasive across tools, systems, and services. Each incremental capability compounds efficiency, decision quality, and revenue capture, driving durable GPU infrastructure demand.
Appendix – Other Industries
Transport / Energy / Infrastructure ($ 65 bn)
On mobile, scroll left/right to view all columns.
| Segment | Base Market ($B) | AI Adoption (%) | Incremental AI Rev ($B) |
|---|---|---|---|
| Connected vehicle systems | 90 | 8.5 | 8 |
| Fleet & logistics | 120 | 8.5 | 10 |
| Aviation ops | 140 | 7.0 | 10 |
| Energy exploration & production | 130 | 7.5 | 10 |
| Grid management & forecasting | 150 | 8.5 | 13 |
| Mining & materials | 60 | 8.5 | 5 |
| Agriculture & food | 100 | 9.0 | 9 |
Government / Military ($ 53 bn)
On mobile, scroll left/right to view all columns.
| Segment | Base Market ($B) | AI Adoption (%) | Incremental AI Rev ($B) |
|---|---|---|---|
| Defense: ISR, simulation, autonomy | 220 | 11.5 | 25 |
| Tax & revenue services | 70 | 10.5 | 7 |
| Citizen services | 55 | 9.0 | 5 |
| Education IT & workforce | 80 | 9.0 | 7 |
| Public research & environment | 95 | 9.0 | 9 |
Healthcare ($ 29 bn)
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| Segment | Base Market ($B) | AI Adoption (%) | Incremental AI Rev ($B) |
|---|---|---|---|
| Diagnostics / imaging | 120 | 7.5 | 9 |
| Clinical data mgmt | 100 | 8.0 | 8 |
| Drug discovery / R&D | 80 | 9.0 | 7 |
| Hospital operations | 70 | 7.5 | 5 |
Finance / Insurance ($ 32 bn)
On mobile, scroll left/right to view all columns.
| Segment | Base Market ($B) | AI Adoption (%) | Incremental AI Rev ($B) |
|---|---|---|---|
| Risk modelling & trading | 130 | 8.0 | 10 |
| Claims & underwriting | 110 | 8.0 | 9 |
| Fraud detection | 90 | 8.0 | 7 |
| Customer advisory / CX | 80 | 7.0 | 6 |
Education ($ 16 bn)
On mobile, scroll left/right to view all columns.
| Segment | Base Market ($B) | AI Adoption (%) | Incremental AI Rev ($B) |
|---|---|---|---|
| Digital learning / tutoring | 80 | 9.0 | 7 |
| Institutional admin | 45 | 8.0 | 4 |
| Research / analytics | 60 | 9.0 | 5 |
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