Conversational AI Market Report and Forecast 2025-2034

The global conversational AI market size reached approximately USD 9.69 Billion in 2024. The market is projected to grow at a CAGR of 22.90% between 2025 and 2034, reaching a value of around USD 76.18 Billion by 2034.

Conversational AI is a developing technology used in automated messaging and speech-enabled applications and devices to offer a human-like conversational experience to customers via machines. For instance, chatbots are software programmes that simulate human-like conversation by making use of artificial intelligence along with natural language processing. Conversational AI technology is used to imitate human interactions, recognising speech and text inputs translated across languages. This technology is mainly adopted by enterprises to enhance customer service, as it provides immediate automated responses and makes the experience seem more personalised.

The heightened digitalisation with increased adoption of the Internet of Things (IoT) and increasing access to Internet facilities across industries is anticipated to propel the conversational AI market growth. Artificial intelligence in chatbots, for instance, is used to simulate human dialogues by learning previous interactions and predicting subsequent exchanges, which would allow for quick and convenient conversations. Furthermore, the self-learning interface of chatbots enables them to correct their mistakes with every interaction, thus, giving them a human-like feel. In addition, the rising awareness about conversational AI is also contributing to its popularity. For instance, voice-activated services such as Apple's Siri, Lenovo's Cortana, and Google's Ok Google are witnessing increased utilisation along with devices such as Google Mini, which can conversate and carry out small tasks.

Key Trends and Developments

Growing development of affordable AI chatbots; personalisation and contextualisation; increasing use of omnichannel marketing strategies; and growing demand for AI-enhanced customer support services are the major trends impacting the conversational AI market growth

Sep 2023

Fujitsu unveiled two novel AI trust technologies designed to enhance the dependability of responses generated by conversational AI models as well as identify and address hallucinations in conversational AI models.

Feb 2024

Amazon introduced Rufus, a shopping assistant powered by conversational AI, aiming to elevate the shopping experience for its users.

Feb 2024

Kore.ai, a prominent platform in Conversational and Generative AI, has successfully raised USD 150 million in funding round spearheaded by FTV Capital and saw significant participation from NVIDIA, along with other current investors.

Feb 2024

Google Maps is undergoing a significant transformation with the integration of generative AI, enabling users to engage in conversational searches for locations.

The growing development of affordable AI chatbots

Advances in AI and machine learning, along with the availability of open-source frameworks and cloud-based services, are reducing the cost and complexity of developing chatbots.

Personalisation and contextualisation in conversational AI systems

Conversational AI systems are becoming more sophisticated as they can remember past interactions and preferences, allowing for more contextual and relevant engagements with users.

Increasing use of omnichannel marketing strategies in conversational AI

Omnichannel strategies in conversational AI aim to provide customers with a consistent and unified experience when they are interacting with a brand through any channel.

Growing consumer demand for AI-enhanced customer support services

AI-enhanced customer support, through chatbots and virtual assistants, can provide instant replies 24/7, addressing this expectation effectively.

Conversational AI Market Trends

Advancements in AI and machine learning, combined with the widespread availability of open-source frameworks and cloud-based services, are significantly lowering the barriers to developing chatbots. These advancements in AI and machine learning have led to more sophisticated natural language processing (NLP) and understanding (NLU) capabilities as these technologies are becoming more accessible to developers through various platforms and services.

Open-source frameworks like Rasa, Botpress, or Microsoft Bot Framework provide developers with powerful tools to build chatbots without starting from scratch. These frameworks come with pre-built functionalities, extensive documentation, and community support, simplifying the development process, which aids conversational AI market development.

Fujitsu announced the introduction of two innovative AI trust technologies aimed at enhancing the trustworthiness of responses provided by conversational AI models. The advancements encompass a technique designed to identify hallucinations in conversational AI models. Hallucinations in this context refer to instances where generative AI produces outputs that are incorrect or irrelevant.

Market Segmentation

“Conversational AI Market Report and Forecast 2025-2034” offers a detailed analysis of the market based on the following segments:

Market Breakup by Component

• Platform
• Services

Market Breakup by Technology

• Machine Learning and Deep Learning
• Natural Language Processing
• Automated Speech Recognition

Market Breakup by Deployment Mode

• Cloud
• On- Premises

Market Breakup by End Use

• Banking
• Financial Services, and Insurance
• Retail and E-commerce
• Healthcare and Life Sciences
• Travel and Hospitality
• Telecom
• Media and Entertainment

Market Breakup by Region

• North America
• Europe
• Asia-Pacific
• Latin America
• Middle East and Africa

Cloud-based deployment is expected to dominate the conversational AI market amid its growing implementation in multiple end-use sectors

The cloud segment is predicted to hold a significant conversational artificial AI market share. This can be attributed to the increased implementation of cloud technology in major industry verticals such as the healthcare and retail sectors to consolidate business processes, provide access and storage to a wide range of data, and improve work efficiency. In addition, the adoption of cloud-based models also offers low maintenance costs, which is predicted to aid the market growth in the coming years.

The demand for on-premises solutions in the conversational AI market is significant, particularly among businesses that prioritise data security, compliance, and customisation. For sectors that handle sensitive information, such as finance, healthcare, and government, on-premises solutions offer greater control over data security. Companies can enforce their own security protocols and comply with stringent regulations regarding data handling and privacy.

The retail and e-commerce sectors account for a major conversational AI market share, as retailers seek to improve customer experience

The conversational AI market growth is supported by its rising usage in the retail and e-commerce sectors as chatbots and virtual assistants, enable 24/7 customer service, providing instant responses to inquiries, resolving issues, and guiding customers through their shopping journey, which significantly enhances customer satisfaction and loyalty. AI-driven conversational tools can also offer personalised recommendations based on a customer's browsing history, purchase records, and preferences, mimicking a personalised shopping assistant and making the shopping experience more engaging and tailored.

The conversational artificial intelligence market in healthcare and life sciences is growing rapidly, driven by the need for improved healthcare accessibility, patient engagement, and operational efficiency. Conversational AI can provide 24/7 support to patients, answering queries, providing health information, and guiding them through treatment processes. This constant support can significantly improve patient engagement and satisfaction.

Conversational AI Market Analysis by Region

North America is estimated to hold a significant share of the market in the forecast period. The growth can be attributed to the presence of the leading market players in the region. In addition, the heightened adoption of conversational AI-based chatbot services by various enterprises for routine customer service applications to enhance customer satisfaction and improve operational efficiency is also expected to aid market growth. Moreover, the increased investment in the development of artificial intelligence technology is also expected to positively impact the market growth in the coming years.

The Asia-Pacific conversational AI market is also witnessing a robust growth as many countries in the region are actively pursuing digital transformation in various sectors. Governments and businesses are investing in AI and related technologies to improve services, enhance productivity, and foster innovation. The region also has a high rate of internet and smartphone penetration, with a significant portion of the population accessing digital services through mobile devices which creates a conducive environment for mobile-first conversational AI applications.

Competitive Landscape

The market players are leveraging advanced technologies and updating their existing offerings to stay ahead in the competition

The players in the conversational AI market are actively seeking and securing funding to strengthen their market presence and further develop their AI technology. Companies are using the capital from funding rounds to scale their operations, expand their teams, and increase their market reach which includes entering new geographic markets and industry verticals where conversational AI can address specific needs.