Artificial intelligence (AI) in the education market is anticipated to grow at a significant CAGR of 16.6% during the forecast period (2024-2031). The market growth is attributed to the growing acceptance of online learning for skill development. The rising usage of advanced AI technologies such as deep learning, machine learning, and natural language processing in training and educational software to enhance user experience and performance along with increasing investment in the private sector making a significant contribution to the global AI in Education market growth. According to the Artificial Intelligence Index Report 2023, Global AI private investment was $91.9 billion in 2022. During the last decade, AI investment has significantly increased. In 2022, the amount of private investment in AI was 18 times greater than year 2013. The US led the global in terms of the total amount of AI private investment. In 2022, the $47.4 billion invested in the US was roughly 3.5 times the amount invested in the next highest country, China ($13.4 billion). In 2021, educational institutions and nonprofits (32,551) had the greatest number of collaborations, followed by industry and educational institutions (12,856), and educational and government institutions (8,913).

Market Dynamics

Growing Use of Intelligent Tutoring Systems for Appropriate Feedback

Providing insightful and focused feedback to students is one of the most significant duties of a lecturer or class teacher. With so many students in the class, it might be challenging, though. As a result, interactive learning environments (ILE) are being used by several universities to raise the standard of mentorship and feedback. To create a continuous learning environment in a student's life, ILE suggests combining e-learning strategies and technologies (learning management systems, or LMS) with interactive learning approaches. Teaching students to acquire knowledge and a greater grasp of a subject based on their prior experience with it is the major goal of an ILE.

From Personalized Learning to Educational Robots

The fact that every student learns and comprehends instructions at a different pace is a problem for educators. Through individualized learning, AI offers a way around this issue. The term "tailored educational content to the unique needs of individual students" refers to a method of creating instructional materials that consider each student's requirements, learning style, and degree of understanding. This method aids students during their study time and helps them avoid failing tests. Although most people assume that personalized education is primarily used in K–12 settings, a growing number of higher education institutions have begun incorporating it into their instructional strategies.

Market Segmentation

• Based on the component, the market is segmented into solutions, and services.

• Based on the deployment, the market is segmented into on-premises and cloud.

• Based on the technology, the market is segmented into natural language processing (NLP), deep learning, and machine learning.

• Based on the application, the market is segmented into learning platforms & virtual facilitators, intelligent tutoring systems (ITS), smart content, fraud and risk management, educational diagnosis and assessment, student-initiated learning, intelligent computer-assisted instruction, and others (education data management, job recommendation, and training and development).

Solutions is Projected to Hold the Largest Segment

The solutions segment is expected to hold the largest share of the market. The rise in smartphone usage, improved internet connectivity, and the acceptance of digital payment methods have all contributed significantly to the global expansion of the online education and digital market, which in turn is propelling the solutions segment. Market players offer AI solution content with advanced generative artificial intelligence (Gen AI), offering a beneficial aid for students and nurse educators navigating courses, exam preparation, and the transition into clinical practice. For instance, in April 2024, Elsevier Health introduced Sherpath AI to address challenges facing US nursing education. The new AI solution provides in direct response to critical needs highlighted by the nursing educational community, including the demand for reliable study resources, improved student engagement with course materials, and driving capacity and effectiveness in the face of resources.

Learning Platform & Virtual Facilitators Segment to Hold a Considerable Market Share

The learning platform & virtual facilitators segment is expected to hold a considerable share of the market. The factors supporting segment growth include expanding global use of digital learning technologies in education, virtual facilitators using a variety of social development-related skills, and suggestions to assist students in solving complex real-time social difficulties. Market players democratize quality education and strengthen the next-generation workforce with digital and life skills. For instance, in June 2023, Infosys introduced a free AI certification training on Infosys Springboard. Infosys AI-first specialists and data strategists, responsible for delivering Infosys Topaz AI-first set of services, solutions, and platforms will help shape the curriculum to help learners build future-ready skillsets. The certification offers a variety of courses that cover a broad spectrum of topics related to AI, including an introductory course on AI and Generative AI, with a focus on deep learning and natural language processing, and a masterclass on AI and the impact of Generative AI, that aim to focus on prompt engineering and AI-first software engineering. 

Regional Outlook

Global AI in education market is segmented based on geography including North America (the US, and Canada), Europe (the UK, Italy, Spain, Germany, France, and the Rest of Europe), Asia-Pacific (India, China, Japan, South Korea, and Rest of Asia-Pacific), and the Rest of the World (the Middle East & Africa, and Latin America). 

Relative AI Skill Penetration Rate by Education Industry across Geographic Areas, 2015–2021

Source: Artificial Intelligence Index Report 2022

Growing Demand for AI in Education in Asia-Pacific

• The regional growth is attributed to pivotal factors such as the growing demand for virtual learning from colleges and universities. As the number of AI-backed industrial applications rises, education companies have teamed up with universities to create new training formats for talent in the AI sector. This allows them to better match with the latest industry shifts and development trends.  Furthermore, it allows academic institutions to upgrade their current models using innovative AI technology without having to reinvest in their capital costs.

• In April 2024, the Japanese Minister of Education and US Commerce Secretary announced two new university-corporate AI partnerships worth $110.0 million. The two new research partnerships in AI are between the University of Washington and the University of Tsukuba and between Carnegie Mellon University and Keio University. The partnerships are supported by $110.0 million in combined private sector investment from NVIDIA, Amazon, Arm and Softbank Group, Microsoft, and nine Japanese companies.

Global AI in Education Market Growth by Region 2024-2031

North America Holds Major Market Share

North America holds a significant share owing to the presence of numerous prominent AI in education companies and providers such as Amazon Web Services, Inc., Google LLC, IBM Corp., and Microsoft Corp., in the region. The market growth is attributed to the large number of end-users adopting educational devices for AI in education, the presence of prominent firms that provide solutions and services, and technology infrastructure facilities in education. Additionally, governments in the region invest and provide enhanced resource efficiency, minimizing waste and offering valuable insights to be used in educational policy. For instance, in December 2023, the US Department of Education announced $277.0 million in education innovation and research grants to help address academic recovery. The Education Innovation and Research (EIR) grant program has been awarded to 45 grantees to advance educational innovation, research, and develop new solutions to addressing persistent educational opportunity gaps for students who have been historically underserved. 

Market Players Outlook

*Note: Major Players Sorted in No Particular Order.

The major companies serving the AI in education market include Amazon Web Services, Inc., Google LLC, IBM Corp., Microsoft Corp., and SAS Institute Inc. among others. The market players are increasingly focusing on business expansion and product development by applying strategies such as collaborations, mergers and acquisitions to stay competitive in the market. 

Recent Development

• In October 2023, Canva introduced a new library of over 5,000 customizable classroom resources – featuring detailed, ready-to-teach curriculum lessons developed in collaboration with experts like NASA and The New York Times – through to advanced accessibility features, and a suite of AI tools to streamline lesson planning and boost student creativity.

• In October 2023, the UK government announced a £2.0 million ($2.1 million) investment in Oak National Academy to improve and expand Artificial Intelligence tools for teachers. It supports teachers with high-quality curriculum resources online, to create new teaching tools using AI – marking the first step towards providing every teacher with a personalized AI lesson-planning assistant.

The Report Covers

• Market value data analysis of 2023 and forecast to 2031.
• Annualized market revenues ($ million) for each market segment.
• Country-wise analysis of major geographical regions.
• Key companies operating in the AI in education market. Based on the availability of data, information related to new product launches, and relevant news is also available in the report.
• Analysis of business strategies by identifying the key market segments positioned for strong growth in the future.
• Analysis of market-entry and market expansion strategies.
• Competitive strategies by identifying ‘who-stands-where’ in the market.