The conversational artificial intelligence (AI) market growth is driven by a number of factors, such as the soaring demand for AI-enabled customer support services, escalating number of solution providers, and prospect of a higher return on investment (ROI) for businesses deploying such solutions. Owing to these factors, the value of the market is expected to increase from $3.2 billion in 2018 to $15.0 billion by 2024, at a CAGR of 30.2% during the forecast period (2019–2024).

AI solutions are being widely adopted by businesses for consumer service applications because AI-powered chatbots can resolve customer queries without any human guidance. These solutions also facilitate the management of high volumes of data structurally. Owing to these advantages, the deployment of AI chatbots has resulted in reduced operational costs and effective customer care services. Due to the increasing focus on enhancing customer engagement, the retail and e-commerce sectors are expected to deploy AI-powered conversational solutions on a large scale in the years to come.

Another key factor driving the conversational AI market growth is the prospect of a higher ROI for companies deploying such solutions. Enterprises use conversational AI bots to improve customer experience and enhance employee productivity. Conversational AI bots are one-time investments, which is beneficial for these firms in the long run. A bot can engage in numerous conversations at a time, thus resolving several queries at an instance, which, in turn, eliminates the need to hire a large number of employees. This results in a huge cost curtailment for business entities.

Moreover, the increasing adoption of AI chatbots and intelligent virtual assistants (IVA) in the healthcare sector is propelling the conversational AI market growth. These solutions are gaining traction in the healthcare industry as they assist patients in booking appointments and follow-ups and helps healthcare facilities and professionals in tracking the health status of patients and delivering a customized experience. Healthcare stakeholders, including clinics and hospitals, are concentrating on integrating chatbots for regular patient engagement.

The application segment of the conversational AI market is classified into personal assistant, customer support, branding and advertisement, customer engagement and retention, and onboarding and employee retention. Amongst these, the personal assistant category is expected to demonstrate the fastest growth throughout the forecast period. This can be owed to the increasing usage of chatbots and IVA, which act as personal assistants, because they understand open conversations while converting them to specific conversations, depending on the requirements of the user.

Globally, North America accounted for the largest share in the conversational AI market in the historical period (2014–2018), and it is expected to retain its dominance in the forecast period. This can be ascribed to the high investments for the integration of AI technologies, such as machine learning (ML) and natural language processing (NLP), in existing conversational solutions, rapid technological advancements, constant focus of governments on improving AI technologies, and existence of established vendors, such as Oracle Corporation, Microsoft Corporation, International Business Machines (IBM) Corporation, and Google LLC.

Thus, the growing deployment of conversational AI solutions among enterprises, hospitals, clinics, and pharmaceutical companies is expected to propel the market growth in the forecast period. Moreover, the constant developments in AI technologies are boosting the expansion of this market.