AI In Healthcare Market Size, Trends, Growth Analysis Report By Component, By Application, By Technology, By End-User, By Geography - Competitive Analysis, Historical Data, forecast 2029

Global AI In Healthcare Market - Focused Insight 2024-2029

AI IN HEALTHCARE MARKET SIZE & INSIGHTS

The global AI in healthcare market size was valued at USD 14.33 billion in 2023 and is projected to surge to USD 153.61 billion by 2029, growing at a remarkable CAGR of 48.50% during the forecast period. The unprecedented market growth is being fueled by a global shortage of healthcare professionals, the accelerated use of AI in medical imaging and diagnostics, and the expanding integration of automation and robotics into clinical and operational healthcare workflows. Moreover, the artificial intelligence (AI) in healthcare market’s momentum is driven by the rise of AI-focused healthcare startups, the increasing demand for personalized medicine, and the widespread push toward digital healthcare transformation.

AI in healthcare refers to the implementation of machine learning (ML), deep learning (DL), and natural language processing (NLP) to improve patient diagnosis, treatment planning, outcomes, and overall experience. These intelligent systems are transforming how healthcare is delivered—enhancing accuracy, speed, and scalability across a variety of applications, from patient monitoring and diagnostics to drug discovery and smart medical devices. Furthermore, constant advancements in AI technologies, strong government support, and the rapid shift toward advanced, personalized care delivery are pivotal factors revolutionizing the healthcare landscape. These elements are not only enhancing access to safe, effective care but are also transforming the development of innovative treatment solutions. As these trends continue to evolve, they are expected to accelerate AI in healthcare market growth, ensuring sustained expansion in the coming years.

AI IN HEALTHCARE MARKET TRENDS & DRIVERS

Emergence of New AI Start-ups in the Healthcare Market

The AI in healthcare market has been rapidly evolving, fueled by the rise of new start-ups worldwide. Each year, an increasing number of start-ups are emerging within the healthcare sector, contributing innovative technologies and solutions that are transforming the industry. These start-ups are particularly crucial in areas with limited access to medical facilities, where AI-driven solutions are enabling remote patient care. In the last decade, the number of AI healthcare start-ups grew significantly, from 12-15 new companies annually to over 70-110 globally. This surge highlights the growing demand for AI-driven healthcare solutions, signaling lucrative growth opportunities within the global artificial intelligence (AI) in healthcare market.

Automation & Robotics in Clinical Surgeries: A Key Trend in the AI Healthcare Market

Automation and robotics are becoming increasingly prevalent in clinical settings, particularly in surgical procedures. The integration of AI in healthcare has significantly improved the efficiency and safety of surgeries, with robotic systems reducing human errors and enhancing outcomes. As surgical robots continue to evolve, they provide a perfect platform for AI models to further optimize surgical tasks, leading to safer, more efficient procedures. The use of AI to automate surgical tasks has proven to increase intraoperative safety and efficiency, marking a key shift in the future of clinical care within the global artificial intelligence (AI) in healthcare market.

AI in Clinical Research: Transforming Drug Discovery and Reducing Costs

Artificial intelligence is revolutionizing drug discovery, offering improved accuracy, speed, and cost-efficiency. The integration of AI tools in the pharmaceutical and biotechnology industries is streamlining the drug development process, from filtering datasets for relevant compounds to modifying leads for more effective treatments. Clinical trials, traditionally costly endeavors requiring investments of over $1.5 billion, are seeing cost reductions of up to 40% thanks to AI’s involvement. In 2022, pharmaceutical companies invested over $100 billion in research and development, much of which was supported by AI-powered tools to accelerate the drug discovery cycle.

Addressing Healthcare Worker Shortages Through AI

The global healthcare industry is facing a significant shortage of healthcare professionals. The World Health Organization has predicted a shortage of over 10 million healthcare workers by 2030. This situation is further complicated by an aging workforce and increasing demand for specialists. As a result, there is a growing need for solutions that reduce the burden on healthcare workers and enhance overall efficiency. AI is playing a crucial role in addressing this challenge, offering solutions that can help alleviate the strain on overworked healthcare professionals.

AI Adoption in Healthcare: Reducing Costs and Improving Outcomes

Healthcare costs are rising globally, particularly in areas such as diagnosis, R&D, drug discovery, and clinical care. As AI adoption continues to grow within the healthcare sector, it is proving to be a game-changer in reducing operational and labor costs while improving clinical performance. Even though AI is still in the early stages of adoption across healthcare, its economic impact is already substantial. In administrative tasks, AI can automate up to 50% of workflows, leading to significant cost savings. According to the U.S. Department of Health & Human Services, AI has the potential to help detect over USD 200 billion in fraudulent healthcare claims annually, further illustrating its potential to reduce waste and improve cost efficiency.

INDUSTRY RESTRAINTS

High Installation & Integration Cost

While the adoption of AI technology is accelerating across the healthcare sector, the high cost of implementation remains a significant barrier, especially in developing markets. This is a critical challenge in the global artificial intelligence (AI) in healthcare market, as advanced AI systems often involve multiple solution platforms, each contributing to the overall expense.

The cost of adopting AI can vary significantly depending on the complexity of the platform and the intelligence level required. More advanced systems that minimize human intervention and perform complex tasks autonomously require higher investments. Additionally, AI systems rely heavily on data—yet working with unstructured data is more complex and costlier than with structured data, increasing operational burdens.

Key factors driving up AI development and integration costs include:

1. The volume and format of data (structured vs. unstructured),
2. The capacity needed for data storage,
3. The customization demands are unique to each healthcare organization.

These variables collectively increase the overall cost structure and make AI adoption more difficult for smaller facilities or institutions in cost-sensitive regions. Despite its potential, the financial burden of AI remains a major restraint in the global AI in healthcare market, slowing down wider implementation.

ARTIFICIAL INTELLIGENCE (AI) IN HEALTHCARE MARKET SEGMENTATION INSIGHTS

INSIGHTS BY COMPONENT

The global AI in healthcare market by component is segmented into software & services and hardware. The software & services segment holds the largest share of artificial intelligence in healthcare market, driven by the continuous advancement of artificial intelligence technologies and the growing need for powerful, reliable tools across the healthcare ecosystem. AI healthcare software is rapidly reshaping the industry by providing clinical professionals and biopharma companies with cutting-edge solutions to enhance patient care, diagnostics, treatment, and drug discovery.

Powered by machine learning and advanced data analytics, AI-based healthcare software plays a critical role in analyzing patient data, predicting clinical outcomes, and delivering personalized treatment plans—ultimately helping to reduce hospital burden and improve healthcare delivery. Additionally, these solutions help minimize medical and dosage errors, streamline workflows, and contribute to saving lives by enabling faster and more accurate medical decisions. Moreover, leading companies are offering sophisticated software and services that cover a broad range of healthcare management activities. These tools are designed not only to save time and reduce costs but also to optimize the balance between human intervention and automated systems, making them invaluable to modern healthcare infrastructure.

INSIGHTS BY APPLICATION

The global AI in healthcare market by application is segmented into hospital workflow management, patient management, medical imaging & diagnosis, and drug discovery & precision medicine. The hospital workflow management segment is experiencing significant momentum, projected to be the fastest-growing segment in global artificial intelligence (AI) during the forecast period. AI is playing a pivotal role in addressing the limitations of traditional healthcare data management methods, which often struggle with incomplete, inconsistent, redundant, and noisy data—particularly in electronic health records (EHRs).

With the volume of healthcare data doubling approximately every five years, the surge in online data generation has far outpaced the capacity of manual systems. This rapid expansion is fueling the demand for AI-powered hospital workflow solutions capable of managing, analyzing, and streamlining complex datasets in real-time. One of the most transformative trends within this segment is the application of predictive analytics. Leveraging sophisticated AI algorithms, predictive tools enable hospitals to anticipate patient needs, optimize resource allocation, and support faster, more accurate clinical decision-making. By enhancing operational efficiency and patient outcomes, AI-driven workflow management is becoming a cornerstone of modern healthcare systems.

INSIGHTS BY TECHNOLOGY

The machine learning technology segment holds the largest share of the global AI in healthcare market, based on technology type. ML is widely used to identify patterns in behavior, streamline business processes, and accelerate product development, making it a foundational technology for many leading healthcare and biopharma organizations. The healthcare industry is increasingly investing in AI and machine learning due to their transformative benefits. ML has the potential to automate routine tasks, easing the burden on healthcare workers and enhancing operational efficiency. In an environment where data analysis drives decision-making, machine learning simplifies the process of extracting actionable insights from massive datasets.

Furthermore, the deep learning segment holds a significant share of the global AI in healthcare market, and it is projected to grow substantially, showing an absolute growth of 981.90% during the forecast period. This strong growth trajectory underscores deep learning’s expanding role in transforming healthcare delivery. Among all industries, healthcare has emerged as one of the most prominent adopters of deep learning technologies, integrating them into real-world clinical environments with high-value applications. From diagnostics to patient monitoring, deep learning is driving innovation across multiple areas of care. Healthcare professionals are increasingly seeking advanced tools for patient data management, and deep learning is proving essential in this domain. With its ability to analyze large, complex datasets—including patient histories, current medical records, test results, and insurance information—deep learning models powered by neural networks provide powerful insights that support clinical decision-making and personalized treatment planning.

INSIGHTS BY END-USER

The global AI in healthcare market by end-user is segmented into healthcare providers, pharma & biotech and medical device companies, payers, and other end-users. In 2023, the healthcare providers segment accounted for approximately 49% of the global artificial intelligence (AI) in healthcare market, highlighting its critical role in driving AI adoption within the industry. AI has already transformed many sectors, and hospital care is no exception. AI-powered medical instruments are proving invaluable for both doctors and patients, offering significant benefits across various areas of medical care. One of AI's key strengths lies in its ability to consolidate and manage patient data on a single platform, enabling providers to access a comprehensive medical history. This allows for more accurate diagnoses through comparisons of past and current health conditions. For healthcare providers, AI is revolutionizing care delivery, offering solutions that not only enhance efficiency but also alleviate many of the challenges faced by an overburdened workforce. As the healthcare sector navigates increasingly complex demands, AI continues to offer powerful tools to balance opportunities with operational pressures, ultimately creating a more resilient and responsive healthcare system.

Furthermore, the pharma & biotech, and medical device companies segment is expected to experience the highest growth in the AI in healthcare market during the forecast period. AI technologies are being applied across nearly every aspect of the pharmaceutical and biotech industries, significantly enhancing data processing capabilities. The integration of AI is unlocking new potential within the healthcare sector, particularly in research and development (R&D), which is a major driver of this segment’s growth.

AI IN HEALTHCARE MARKET’S GEOGRAPHICAL ANALYSIS

North America holds the largest share of global artificial intelligence (AI) in healthcare market, accounting for over 46% in 2024, and is projected to witness the fastest compound annual growth rate during the forecast period. The U.S. dominates the regional market landscape due to the high advancement in healthcare infrastructure, digitalization, and IoT adoption in health facilities, an increasing surge of telemedicine and telehealth, and wide acceptance of technologies in healthcare management. Over 35% of North American healthcare professionals look forward to AI in healthcare services. In the US, over 38% of health professionals and patients think integrating AI in medicine and health can lead to better patient healthcare outcomes. Furthermore, the shift from hospital to home care delivery is increasing the adoption of telehealth/telemedicine services, accelerating AI's integration rate.

Europe holds a significant share of the global AI in healthcare market and is expected to grow at a healthy growth rate with a CAGR of 48.03%, as compared to other regions during the forecast period. In Europe, the rising aging population with chronic diseases, lack of health workforce, healthcare inequities, inefficiency, and sustainability are some of the healthcare issues accelerating the use of AI in the healthcare sector. Currently, the application of AI in healthcare is distributed in clinical practices, biomedical research, health administration, and public health. In Europe, Germany, France, the UK, and Italy are some of the leading countries contributing to high demand for AI implementation in healthcare, followed by Spain, Denmark, and Ireland are some of the emerging destinations.

In 2023, APAC accounted for the third-largest share of the global AI in healthcare market, and China is the major revenue contributor in this region. AI analytical tools in personal health data and personal health programs offer the best medical advice to treat general to severe cases. Apart from China, India, Japan, and South Korea, some other countries such as Australia, Singapore, and Indonesia are some of the countries rapidly shifting towards AI solutions in healthcare. Furthermore, Brazil, Mexico, and Argentina are the leading revenue generators for the Latin American AI in healthcare market. Other countries like Chile, Colombia, and Peru are expected to grow at a decent pace during the forecast period in Latin America. Moreover, the Middle East & Africa are some of the largest regions that witnessed for significant prevalence of chronic diseases. Increasing awareness and access to healthcare with increasing digitalization and advancement in medical technologies provide lucrative market growth opportunities. Turkey, South Africa, Saudi Arabia, and the UAE are the major revenue contributors in this region for healthcare artificial intelligence (AI).

VENDOR LANDSCAPE

The global artificial intelligence (AI) in healthcare market report contains exclusive data on 40 vendors. The AI in healthcare market is highly fragmented, and large corporations dominate the market. However, there are significant growth opportunities for new entrants. Though the market is dominated by major players, many investigational and small companies are coming into existence with innovative AI health solutions. Google, Amazon Web Services, Microsoft Corporation, Medtronic, NVIDIA Corporation, Siemens Healthineers, Intel Corporation, Merative, and Caption Health are some of the leading companies accounting for more than 60% of the market share in the global artificial intelligence in healthcare market. These vendors continuously develop and invest in AI-based health tools and are expected to dominate the market with continued engagement.

Most leading players are focusing on implementing various strategies such as product launches and approvals, marketing and promotional activities, acquisitions, increased R&D investment, and strengthening their distribution networks to enhance their share and presence in the AI in healthcare market. Merative, Augmedix, and others are identified as the rapidly growing vendors in the market. These companies have a wide geographical reach, diversified product portfolio, and a strong focus on innovation and research activities. In the past few years, several leading and emerging companies launched AI platforms for healthcare in the global market, creating high competition across the global market. Furthermore, several major M&A and collaborations are also registered.

Recent Developments in the Global AI in Healthcare Market

1. In 2024, Google Cloud launched a tool by generative AI that allows clinicians to search information across patient notes, clinical data, and scanned documents- Vertex AI. Furthermore, in 2023, Google introduced MedLM, a generative AI model for healthcare with two generative AI tools based on the language model Med-PaLM 2. 
2. In 2024, NVIDIA Healthcare launched new generative AI microservices for chemistry, biology, imaging, and healthcare information in each NVIDIA DGX Cloud.
3. In 2024, Epic – a HER giant, plans to launch new AI validation software for healthcare settings to test and monitor several procedures.
4. In 2024, Salesforce launched an AI solution for health workers, which helps automate some administrative tasks that minimize physician burnout.
5. In 2023, Microsoft launched a series of Health AI initiatives, including a partnership announcement with EPIC, and launched DAX ambient clinical noting with its Nuance subsidiary.
6. In 2023, LeanTaas launched the iQueue Autopilot generative AI tool for hospital operators. This tool allows human-like conversation and actionable insight into patients and staffing.