LIVE MARKETS-OpenAI's dominance hinges on building AI ecosystem in $3.5 trillion market- Citi

Reuters01-22
LIVE MARKETS-OpenAI's dominance hinges on building AI ecosystem in $3.5 trillion market- Citi

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OPENAI'S DOMINANCE HINGES ON BUILDING AI ECOSYSTEM IN $3.5 TRILLION MARKET- CITI

Citigroup said on Wednesday it estimates the global AI market to be worth more than $3.5 trillion in 2030 and expects OpenAI to dominate it to build on its ecosystem and compete with better-funded players.

"OpenAI comes to the competition with a singular focus on AI, none of the constraints of being a public company, the support of a large ecosystem of partners and investors, and a history of innovators in tech winning over incumbents during significant technological shifts," the brokerage said.

After OpenAI launched ChatGPT in 2022, big tech firms including Alphabet GOOGL.O and Meta Platforms META.O have poured billions into AI infrastructure spending as they compete to build their own large language models and AI agents in a bid to gain market share.

The Wall Street brokerage estimates the enterprise AI market spanning from software to advertising to be over $1.2 trillion in 2030. Citi forecasts the consumer-driven AI market - that includes subscriptions, AI tools, agentic commerce and digital advertising, to be worth about $2.3 trillion.

Technology executives and analysts expect artificial intelligence to generate hundreds of billions of dollars in value, yet forecasts for the market diverge significantly based on the underlying assumptions and metrics employed.

OpenAI, the world's most valuable startup plans to spend more than $1 trillion on AI infrastructure by 2030 and has signed AI deals worth billions of dollars with firms including chip bellwether Nvidia NVDA.O and software firm Oracle ORCL.O.

However, Citi warned the degree of difficulty associated with OpenAI's successful execution is 'exceptionally high', given the risks around funding and competition.

(Siddarth S)

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