Artificial Intelligence in Education Market

Market Overview

The global artificial intelligence in education market size was valued at USD 3.25 billion in 2023. It is estimated to reach USD 53.11 billion by 2032, growing at a CAGR of 36.4% during the forecast period (2024–2032). AI has penetrated almost every field globally; the education sector is no exception. There has been a rise in venture capital investment in AI and EdTech, which is anticipated to drive global market growth. In addition, students nowadays are more inclined towards personalized and adaptive learning, which has enhanced the adoption of intelligent tutoring systems (ITS), thereby boosting global market expansion. Moreover, launching novel AI-powered educational tools is expected to offer market growth opportunities.

Artificial Intelligence (AI) is a field of computer science focused on developing machines and systems capable of imitating human intellect. This includes abilities like learning, reasoning, problem-solving, decision-making, and natural language processing. AI in education encompasses diverse AI technologies and methodologies to augment teaching and learning encounters. This AI program seeks to enhance educational outcomes, optimize administrative processes, and offer valuable insights to educators.

AI can facilitate personalized and adaptive learning, enhance student engagement and results, automate administrative duties, and offer data-driven insights for educators and policymakers. Artificial intelligence algorithms can evaluate students' assignments, quizzes, and exams in an automated manner, offering immediate feedback to both students and instructors. This optimizes efficiency for educators and allows students to obtain feedback on their performance quickly.

Highlights

• Solutions dominate the component segment 
• Machine learning dominates the technology segment 
• Higher education dominates the end-user segment 
• North America is the highest shareholder in the global market

Market Dynamics

Global Artificial Intelligence in Education Market Drivers

Increasing Venture Capital Investment in AI and EdTech

In recent years, there has been a significant increase in venture capital funding for the AI and EdTech industries. This is because investors have recognized the potential of these technologies to disrupt and enhance the education system. Based on a survey by HolonIQ, the global EdTech industry began the previous decade with USD 500 million in Venture Capital invested in 2010 and ended with a remarkable increase of 32 times, reaching USD 16.1 billion in 2020. This amount is nearly twice the previous investment record set in 2018.

Moreover, AI played a significant role in EdTech funding, with firms utilizing AI to provide innovative solutions for personalized learning, adaptable evaluation, content generation, and student engagement. Notable AI and EdTech businesses secured funding in 2020 include Coursera, Udemy, Byju, Quizlet, and Squirrel AI. Therefore, the growth of investment in AI and EdTech is estimated to drive global market growth.

Growing Integration of ITS In-Learning Process

Intelligent tutoring systems (ITS) are computer-based systems that deliver tailored and adaptive training to students, considering their specific requirements, preferences, and learning modalities. ITS employs artificial intelligence methodologies, including natural language processing, machine learning, and knowledge representation, to simulate the student's cognitive state, provide feedback, and adjust the learning materials and speed accordingly.

Evidence has demonstrated that using Intelligent Tutoring Systems (ITS) enhances student performance, motivation, and retention while decreasing the workload and expenses associated with human tutors. According to a study published in the Journal of Computer Applications, students who used intelligent tutoring systems achieved higher academic performance than students who did not utilize the system and instead depended on traditional teaching methods. This is expected to promote the growth of global artificial intelligence in the education market.

Global Artificial Intelligence in Education Market Restraint

Data Safety and Security Issues

Data is the primary fuel source for AI applications, as it facilitates the learning process, enhances performance, and ensures the delivery of precise and pertinent outcomes. However, data also presents substantial hazards for AI in the education market, as it encompasses gathering, retaining, manipulating, and disseminating sensitive and personal data pertaining to students, educators, and educational institutions.

Data breaches, cyberattacks, unauthorized access, misuse, and unethical use of data can undermine the privacy, security, and trust of those involved while also giving rise to legal and regulatory complications. Hence, ensuring the safety and security of data poses a significant obstacle for AI in the education industry. This requires strong and dependable data protection strategies, including encryption, authentication, authorization, and compliance.

Global Artificial Intelligence in Education Market Opportunities

Launch of New Products

In recent years, market participants have increasingly introduced new AI-powered tools to be used in education due to the rapid proliferation of AI. For instance, in October 2023, Canva, the exclusive global visual communication platform, unveiled a collection of K-12 education products as a component of its Canva for Education platform. This groundbreaking move established Canva as the pioneer in using AI-driven educational resources on a large scale. The updated collection of products, comprising various artificial intelligence tools, interactive lessons, and curriculum-supporting content, elevates Canva from a tool for designing classrooms to a comprehensive education platform that can effortlessly create and deliver whole lessons.

Moreover, Microsoft introduced two new features, Bing Chat Enterprise and Search Progress, in August 2023. These characteristics are specifically designed to enhance search capabilities for customers in the education sector. Bing Chat Enterprise is a preview product that allows faculty users of Microsoft 365 A3 and A5 to discuss with an AI-powered assistant. Search Progress is an educational tool that helps students improve their information literacy skills by tracking their search activities and providing feedback. Therefore, these factors are projected to generate market growth opportunities.

Regional Analysis

North America Dominates the Global Market

Based on region, the global artificial intelligence in education market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

North America is the most significant global artificial intelligence in education market shareholder and is expected to expand substantially during the forecast period. The dominance of the North American region can be attributed to the region's position as a hub for technological innovation and growth, as well as being the base for prominent companies in the AI and EdTech sectors, including Google, IBM, Microsoft, Coursera, Udemy, and Quizlet. The region is inclined to embrace AI in education solutions and services alongside robust governmental support and financial assistance for AI and EdTech endeavors. For instance, in January 2024, the North Carolina Department of Public Instruction (NCDPI) published a guidebook on the application of generative artificial intelligence in public schools. The guidebook contains a preliminary collection of suggestions that will be further developed in the upcoming months. School districts are strongly advised to develop supplementary rules tailored to their individual schools. According to the state guidebook, including AI literacy in all school levels and curriculum areas is recommended.

Furthermore, it emphasizes the significance of responsibly integrating AI into the classroom, utilizing technology to enhance the learning process. Teachers can employ artificial intelligence (AI) to streamline administrative work, assess student performance data, and provide teaching strategies tailored to different learning styles. The time conserved by utilizing these technologies could afford teachers additional opportunities to engage directly with students, thereby enhancing learning results. These initiatives are expected to stimulate the expansion of the regional market.

The Asia-Pacific area is projected to exhibit the highest CAGR throughout the projection period. This is due to the region's substantial and expanding population of students and educators, who demand cost-effective and inventive learning and teaching solutions. Moreover, the adoption of personalized learning methods has increased, leading to an expected growth in the implementation of AI in the education sector in this area. According to research conducted by Ernst & Young, 80 percent of Indian students consider personalized education to be crucial for their learning process.

Furthermore, in India, where more than 250 million students are already engaged in K-12 education, according to UNESCO, the opportunities to utilize AI in the field of education are quite encouraging. The extensive magnitude of the education system and the wide-ranging variety of students have made personalized learning an imperative rather than a privilege. Moreover, in August 2023, India established its inaugural artificial intelligence institute in Kerala. The inauguration of the Santhigiri Vidyabhavan took place in Thiruvananthapuram, the capital city of Kerala, marking a significant and innovative milestone. Former President Ram Nath Kovind officially opened the school. Although the school utilizes AI to provide an innovative learning experience, the significance of traditional teaching roles and human interaction remains essential. Therefore, these variables are expected to contribute to the regional market's growth.

Segmental Analysis

The global artificial intelligence in education market is segmented by component, deployment type, technology, application, and end-user. 

Based on components, the global artificial intelligence in education market is bifurcated into solutions and services. The solution segment owns the largest market share. The global growth of the online education/digital market is primarily driven by increased smartphone users, government involvement, improved internet connectivity, and the adoption of digital payment options. These factors have significantly contributed to the expansion of the solutions segment. The solutions section can be divided into several sub-segments, including Intelligent Transportation Systems (ITS), smart content, virtual facilitators and learning environments, assessment and evaluation, and others. 

Based on deployment type, the global artificial intelligence in education market is bifurcated into on-premise and cloud. The cloud sector segment is projected to dominate the market. The prevalence of cloud-based deployment in the AI in the education market may be ascribed to its advantages, including scalability, flexibility, cost-effectiveness, accessibility, and collaboration. The segment can be divided into public, private, and hybrid clouds. Cloud computing facilitates the ability of AI in education providers to expand their reach and cater to a broader and more varied audience. It also allows for seamless integration with other cloud-based platforms and apps. Moreover, cloud computing facilitates the ability of AI in education users to conveniently access and utilize solutions and services from any device and location. It also allows for seamless collaboration and data/resource sharing across users. 

Based on technology, the global artificial intelligence in education market is bifurcated into machine learning, deep learning, natural language processing, and others. The machine learning segment owns the largest market share. Machine learning (ML) within artificial intelligence centers around developing algorithms that allow computers to understand data and make predictions or judgments without explicit programming. ML aims to enable computers to understand data and improve their performance independently, without human assistance. Machine learning is the fundamental technology allowing AI in education systems to acquire knowledge from data, enhance performance, and deliver tailored and adaptable learning experiences. The machine learning sector can be divided into three sub-segments: supervised learning, unsupervised learning, and reinforcement learning. 

Based on application, the global artificial intelligence in education market is bifurcated into ITS, content delivery systems, interactive websites, virtual facilitators, chatbots, and others. Chatbots in education have emerged as potent instruments to augment learning experiences, automate administrative work, and offer individualized assistance to students. Chatbots offer 24/7 support to students, addressing inquiries, delivering explanations, and providing help beyond normal school hours. This accessibility can be particularly advantageous for kids who may require assistance with homework or studying at late hours. Interactive chatbots facilitate student engagement by employing quizzes, simulations, and games as means of active learning. Chatbots can enhance student motivation and participation by creating a more fun and interactive learning experience. 

Based on end-users, the global artificial intelligence in education market is bifurcated into higher education, K-12 education, corporate training, and others. The higher education segment is expected to dominate the market. The higher education sector is the primary proponent and recipient of AI in education due to its extensive and varied community of students, educators, and researchers, who necessitate sophisticated and groundbreaking approaches, tools, and resources for learning and teaching. Higher education can be divided into universities, colleges, and research institutes.

Recent Developments

• November 2023- Amazon took an important step in promoting the teaching of artificial intelligence (AI) by introducing its "AI Ready" project, which offers eight complimentary courses on AI and generative AI.
• January 2024- Arizona State University partnered with OpenAI to integrate the advanced functionalities of ChatGPT Enterprise into higher education, establishing a novel standard for universities to augment learning, foster creativity, and improve student results.