Explainable AI Market Insights 2025-2034: Growth Forecast and Strategic Priorities

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Explainable AI Market Size Valuation Forecast: What Will the Market Be Worth by 2025?
In recent times, the market size of explainable AI has seen an exceptional growth. It is projected to escalate from $8.1 billion in 2024 to $9.77 billion in 2025, experiencing a compound annual growth rate (CAGR) of 20.6%. This remarkable growth during the historical period is due to factors including the increased adoption of AR and VR technology, soaring demand for XR displays, and expanding need for AR devices, along with economic progression.

Explainable AI Market Size Forecast: What's the Projected Valuation by 2029?
The market for explainable AI is set to experience remarkable expansion in the coming years, with predictions placing its worth at $20.74 billion by 2029, growing at a compound annual growth rate (CAGR) of 20.7%. The surge forecasted over this period is due in large part to its increased uptake in educational games, the broader implementation of gesture-based computing, a rise in smartphone usage, the larger use of interconnected devices, and its growing acceptance in the healthcare and education sectors. Major trends forecasted for this period encompass advancements in micro displays technology, the embracing of new technology, expansion of extended reality technologies, the invention of novel in-vehicle display imaging systems, and the inclusion of avant-garde technology in ERD.

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What Are the Drivers Transforming the Explainable AI Market?
The increasing uptake of the Internet of Things (IoT) is anticipated to significantly stimulate the expansion of the explainable AI market in the future. IoT fundamentally involves a web of interconnected physical devices that are equipped with sensors, software, and other technologies for collecting and exchanging data, as well as for communication with each other via the Internet or other networks. Explainable AI (XAI) is applied in IoT to bolster end-user confidence in machines, render AI models more understandable and transparent, and guarantee transparency, trustworthiness, and effective decision-making within IoT systems. For example, in 2023, a report published by Ericsson, a telecommunications company based in Sweden, stated that total IoT connections amounted to 15.7 billion in 2023, and this number is predicted to rise by 16% to 38.8 billion by the year 2029. Therefore, the increasing adoption of IoT is fueling the expansion of the explainable AI market.

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What Long-Term Trends Will Define the Future of the Explainable AI Market?
Key players in the explainable AI market are turning to strategic partnerships as a method of bolstering their services and broadening their market influence. A strategic partnership is a mutually beneficial alliance between two or more entities, typically businesses, working towards shared, long-term goals. For example, in July 2023, Fujitsu Limited, an information and communications technology company based in Japan, formed an alliance with Informa D&B, a marketing and information company located in Spain. The purpose of this partnership is to improve decision-making by using Fujitsu's explainable AI to carry out transparent data processing and analysis. This action responds to the demand for advanced AI capable of managing risks, particularly in sectors such as financial fraud. XAI provides insight into decision-making processes, elevating the levels of transparency and trust, as well as reducing biases.

Which Segments in the Explainable AI Market Offer the Most Profit Potential?
The explainable ai market covered in this report is segmented -

1) By Software Type: Standalone Software, Integrated Software, Automated Reporting Tools, Interactive Model Visualization
2) By Methods: Model-Agnostic Methods, Model-Specific Methods
3) By Vertical: Banking, Financial Services, And Insurance, Retail And E-Commerce, Information Technology Or Information Technology Enabled Services, Healthcare And Life Sciences, Government And Public Sector, Media And Entertainment, Manufacturing, Energy And Utilities, Telecommunications, Other Verticals

Subsegments:
1) By Standalone Software: Individual Explainability Tools, Model-Agnostic Explainability Solutions
2) By Integrated Software: Embedded Explainability in AI Platforms, Explainability In Data Analytics Tools
3) By Automated Reporting Tools: Automated Model Evaluation Reports, Compliance And Auditing Reports
4) By Interactive Model Visualization: Dashboard Visualization Tools, Interactive Data Exploration Tools

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Which Firms Dominate the Explainable AI Market by Market Share and Revenue in 2025?
Major companies operating in the explainable ai market report are Amazon Web Services, Alphabet Inc., Microsoft Corporation, Intel Corporation, International Business Machines Corporation, NVIDIA Corporation, Salesforce Inc., Equifax Inc., SAS Institute Inc., Mphasis Limited, Fair Isaac Corporation, Databricks Inc., Alteryx Inc., Amelia US LLC, Temenos Headquarters SA, BuildGroup LLC, C3.ai Inc., Data Robot Inc., Tredence Analytics Solutions Pvt. Ltd., ArthurAI Inc., DarwinAI Corp., ISSQUARED Inc., H2O.ai Inc., Fiddler Labs Inc., Ditto Labs Inc.

Which Regions Offer the Highest Growth Potential in the Explainable AI Market?
North America was the largest region in the Explainable AI market in 2024. The regions covered in the explainable ai market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.

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