Artificial Intelligence in IoT Market Size & Outlook, 2025-2033

Artificial Intelligence in Iot Market Size

The global artificial intelligence in IoT market size was valued at USD 9.25 billion in 2024 and is expected to grow from USD 11.08 billion in 2025 to reach USD 47.78 billion by 2033, growing at a CAGR of 19.8% during the forecast period (2025-2033).

Artificial Intelligence in the Internet of Things (AIoT) combines the data-processing capabilities of AI with the connectivity and real-time insights of IoT devices. This synergy enables intelligent decision-making, automation, and predictive analytics across various sectors.

Artificial Intelligence in the Internet of Things is driving transformative growth in industries like manufacturing, healthcare, and smart home technology.

• In manufacturing, IoT enhances efficiency by enabling predictive maintenance, real-time analytics, and process automation, significantly reducing downtime.
• In healthcare, IoT-enabled medical devices integrated with AI offer remote patient monitoring, predictive diagnostics, and personalized care, making healthcare more accessible.
• The smart home segment is also experiencing rapid adoption, with AI-powered IoT devices such as smart thermostats, speakers, and security systems improving convenience and energy efficiency.

Moreover, AIoT processes vast amounts of data collected by connected devices to optimize business decision-making. The deployment of 5G networks and advancements in edge computing are further propelling AIoT adoption, offering reduced latency and improved real-time responsiveness.

Source: Straits Research Analysis

Artificial Intelligence in Iot Market Trends

Increased Adoption in Predictive Maintenance

AI-powered IoT predictive maintenance is revolutionizing equipment and system management across industries. IoT sensors integrated with AI analytics enable organizations to monitor real-time data, such as temperature, vibration, and performance metrics, to predict potential malfunctions. This approach minimizes downtime, reduces maintenance costs, and extends the operational life of equipment.

• For example, in March 2024, Hyderabad Metro Rail (HMR) implemented AI and IoT for predictive maintenance, significantly reducing costs. The initiative, led by Managing Director N.V.S. Reddy, builds on HMR's early adoption of Communications-Based Train Control (CBTC) systems.

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Artificial Intelligence in Iot Market Growth Factor

Rising Expansion of Smart and Connected Devices

The rapid proliferation of smart and connected devices is a key driver in the global Artificial Intelligence (AI) in IoT market. These devices generate vast amounts of data, necessitating advanced AI-powered solutions to process, analyze, and utilize this information effectively.

• For instance, in March 2024, the IoT Community introduced GenAIoT, an innovative solution combining Generative AI with IoT. This platform is designed to enhance industrial and enterprise IoT systems by offering intelligent data analysis, real-time decision-making, and automation capabilities.

Such advancements highlight the evolution of AI-driven IoT solutions in creating smarter, more interconnected ecosystems. The expansion of smart devices in homes, industries, and healthcare, combined with innovations like GenAIoT, is accelerating the demand for robust AI-IoT integrations.

Advancements in Ai Algorithms and Cloud Computing

Advancements in AI algorithms and cloud computing are significantly driving the growth of the global Artificial Intelligence in IoT market. These innovations enable scalable and efficient processing of vast IoT data, facilitating enhanced analytics, automation, and decision-making.

· For example, in April 2024, Zilch announced an extended collaboration with Amazon Web Services (AWS) to accelerate AI innovation across its offerings. Zilch is leveraging AWS’s AI and machine learning services, such as Amazon SageMaker and Amazon Bedrock, to improve customer interactions and strengthen partnerships with merchants.

These tools support the development of advanced AI-driven solutions that are more intelligent, adaptable, and impactful. This partnership underscores the role of cloud computing in democratizing access to cutting-edge AI technologies, enabling businesses to scale their IoT applications efficiently.

Market Restraint

High Implementation Costs and Data Privacy and Security Concerns

The deployment of AI-enabled IoT solutions involves significant investment in specialized hardware like IoT sensors and AI-optimized processors, as well as complex software platforms for data processing and analytics. Additionally, integrating these systems with existing infrastructure requires skilled expertise and customization. These high costs can be a barrier for many businesses.

Moreover, the integration of AI and IoT raises data security and privacy concerns. With vast amounts of sensitive data being processed, the risk of cyberattacks increases. The interconnected nature of IoT devices makes them vulnerable to unauthorized access. Ensuring strong encryption, secure communication protocols, and adherence to privacy regulations is essential to mitigate these risks and foster trust in AI-IoT technologies.

Market Opportunity

Growing Demand for Secure, Efficient, and Scalable Ai Solutions

The growing demand for secure, efficient, and scalable AI solutions presents a significant opportunity for global artificial intelligence in the IoT market. As industries increasingly adopt AI-driven IoT systems, the need for robust, secure infrastructures to handle sensitive data becomes crucial.

• For example, in March 2024, Oracle and NVIDIA partnered to provide accelerated computing and generative AI services, focusing on digital sovereignty and secure data management. This collaboration aims to deliver advanced AI solutions with an emphasis on data privacy, security, and scalability.

By combining NVIDIA's high-performance computing capabilities with Oracle's cloud infrastructure, the partnership enables businesses to harness the full potential of AI while ensuring that their data remains secure and compliant with privacy regulations. This partnership highlights the growing importance of secure AI solutions in powering the next generation of IoT applications, particularly in industries with stringent data security requirements.

Regional Insights

North America leads the global AI in IoT market, driven by its advanced technological infrastructure, substantial R&D investments, and early adoption of AI and IoT solutions. The region benefits from the presence of global tech giants like Google, Amazon, and IBM, along with a thriving startup ecosystem that fosters innovation.

Through funding and policy initiatives, strong governmental support for AI development accelerates the integration of AI and IoT across various industries. Key sectors such as manufacturing, healthcare, and smart cities are thriving in North America, underpinned by a focus on digital transformation and stringent data security frameworks.

• United States: The U.S. is a global leader, with companies like Google, Microsoft, and Intel at the forefront of innovation. Its AIoT integration spans industries, from autonomous vehicles in transportation to smart healthcare solutions. The government’s funding of AI research, alongside a thriving startup ecosystem, propels AIoT in sectors like manufacturing and healthcare, fueling economic growth.

Asia Pacific Artificial Intelligence in Iot Market Trends

Asia Pacific is witnessing the fastest growth, fueled by rapid industrialization, urbanization, and smart city initiatives in countries like China, India, and Japan. China is at the forefront, making substantial investments in AI and IoT technologies to enhance infrastructure and boost global competitiveness. Moreover, India’s drive for digital transformation and Japan’s emphasis on advanced manufacturing systems contribute to the region's momentum. IoT adoption in agriculture, energy, and transportation further strengthens APAC’s potential to lead the global AI-IoT market.

• China’s aggressive push toward AIoT is evident in its smart city projects, like the massive tech hub of Shenzhen. The government’s strong support, including funding and policy frameworks, accelerates AIoT adoption across sectors. For example, Baidu’s AI-powered autonomous driving initiatives and state-backed industrial automation projects showcase China's prominent role.
• India’s AIoT sector is booming, driven by government-backed initiatives like the Smart Cities Mission and rapid urbanization. Companies like TCS and Wipro are enhancing AI and IoT infrastructure, creating opportunities in healthcare, manufacturing, and agriculture. The growing tech ecosystem, along with increased foreign investment, is driving India’s prominence in the global AIoT market.
• Germany’s adoption of AIoT is pivotal in its Industry 4.0 revolution, particularly in manufacturing. With companies like Siemens integrating AI and IoT into smart factories, Germany remains a leader in automation. Collaborative initiatives between businesses and universities ensure continued advancement, positioning Germany as the heart of AIoT development in Europe.
• South Korea’s emphasis on AIoT is reflected in its smart city projects, such as Songdo, which integrates AI-driven infrastructure with IoT. The government’s support, exemplified by the “Digital New Deal,” enhances innovation in IoT and AI integration, particularly in transportation and healthcare, positioning South Korea as an influential player in AIoT technology.
• The UK is advancing in AIoT with initiatives like the £100 million AI Sector Deal, which promotes AI research and integration. Companies such as DeepMind and Arm lead the charge in AI development. The government’s investment in digital infrastructure and its focus on innovation in sectors like healthcare and manufacturing strengthens the UK’s position in AIoT.

Component Insights

Software solutions lead the AI-IoT market, forming the backbone of key functionalities such as data analytics, machine learning, and automation. These capabilities enable real-time decision-making, predictive insights, and seamless integration of IoT systems. Platforms like Microsoft Azure IoT and IBM Watson IoT are preferred for their scalability, advanced analytics, and ease of integration with diverse devices and enterprise systems. The adaptability of software solutions makes them essential for a wide range of industries, supporting innovation and improving operational efficiency, solidifying their dominance.

Application Insights

Predictive maintenance is the leading application in the AI-IoT market, especially crucial for industrial automation and manufacturing, where operational efficiency is paramount. By utilizing real-time data and AI-driven analytics, it can predict equipment failures before they occur, minimizing downtime and costly disruptions. Predictive maintenance also optimizes maintenance schedules, ensuring resource efficiency while extending machinery lifespan. Its widespread adoption across industries underscores its importance in enhancing reliability, boosting productivity, and driving cost-effective operations.

Technology Insights

Machine learning is the dominant technology in AI-powered IoT systems, driving advanced data analysis and intelligent decision-making. Its algorithms enable IoT devices to predict trends, detect anomalies in real-time, and optimize operations dynamically. This technology enhances the performance and efficiency of IoT applications across various sectors, including healthcare, manufacturing, and smart cities. Machine learning’s ability to improve automation, accuracy, and real-time insights makes it a cornerstone for smarter, autonomous IoT ecosystems, securing its leading market share.

End-User Insights

The industrial sector is the largest end-user for AI-driven IoT solutions, driven by the need for automation, cost reduction, and operational optimization. Industries such as manufacturing, energy, and transportation rely on AI-IoT for predictive maintenance, supply chain optimization, and real-time monitoring. These systems enhance productivity through early fault detection, dynamic workflow adjustments, and improved efficiency.

As industries increasingly adopt AI-powered IoT technologies to meet competitive market demands, the industrial sector remains the dominant driver in the AI-IoT market, transforming operations and boosting reliability across sectors.

Company Market Share

Key players in the global market are investing heavily in advanced technologies to strengthen their market position. Companies like Google, Microsoft, and Amazon are integrating AI into IoT solutions, enhancing automation and data analysis capabilities. Many are also pursuing strategies such as collaborations, acquisitions, and partnerships.

Untether AI: An Emerging Player in the Global Artificial Intelligence in IoT Market

Untether AI is a Canadian startup specializing in AI chips designed to optimize inference processes in edge devices. Their technology focuses on delivering high-performance AI capabilities with low power consumption, making it ideal for applications in autonomous vehicles, agricultural equipment, and other edge scenarios.

Recent Developments

• In October 2024- Untether AI launched its latest chip, the 240 Slim, engineered to provide substantial performance while minimizing energy requirements. This chip is tailored for use in autonomous vehicles, autonomous agricultural machinery, and certain data center applications.

List of key players in Artificial Intelligence in IoT Market

1. Microsoft
2. Google
3. IBM
4. Amazon Web Services
5. Intel
6. NVIDIA
7. Oracle
8. SAP
9. Cisco Systems
10. Bosch IoT Suite

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Recent Developments

• December 2024 - Microsoft unveiled updates to Azure Digital Twins, enhancing the platform's capabilities to help developers create detailed digital models of real-world environments. These models are now integrated with AI features, enabling smarter, data-driven decisions. This update expands Azure's potential for industries like manufacturing, smart cities, and IoT solutions.
• January 2025 - Synaptics partnered with Google to advance Edge AI technology for IoT devices. This collaboration integrates Google’s MLIR-compliant machine learning core with Synaptics' Astra™ platform. The goal is to enhance AI-powered devices capable of processing multiple modalities such as vision, image, voice, and sound.

Analyst Opinion

As per our analyst, the global Artificial Intelligence in IoT market is poised for transformative growth, with AI technologies seamlessly integrated into IoT applications to revolutionize various industries.

The rise of machine learning, edge AI, and cloud-based solutions is enhancing IoT systems, enabling real-time analytics, predictive maintenance, and autonomous decision-making. These advancements are unlocking new levels of efficiency and innovation, particularly in industries like manufacturing, healthcare, and smart cities.

However, challenges such as high implementation costs and data privacy concerns continue to pose barriers to broader adoption. Despite these hurdles, ongoing improvements in AI algorithms, coupled with the increasing penetration of IoT devices, are expected to drive the market forward.