A new report from Bain & Company forecasts substantial growth in the AI product market in the coming years. The firm projects that the market for AI-related hardware and software could expand by 40-50% annually, reaching approximately $990 billion by 2027.

Bain & Company global technology and cloud services practice chairman David Crawford joins Market Domination to dig into the bullish projection and discuss the outlook for AI as it seeps into all corners of the market.

Crawford sees three "broad pockets of growth" for AI. First, large hyperscalers building out their capabilities are generating "enormous" demand. This demand, he says, "works its way back through the supply chain and creates shortages in a spectrum of spaces."

The second pocket for growth lies in enterprise adoption. Crawford explains, "We know the trends are smaller models, more specialized models, open source, etc., but likewise requires computational capability. In some cases, they're using special-purpose compute and so forth."

Finally, the third area for growth will likely be seen in independent software vendors that build AI capabilities for their products and run them in their own data centers.

As generative AI becomes more widely adopted, Crawford believes there will be increased interest in sovereign ownership, control, and domiciled data centers. He tells Yahoo Finance, "It's broadly perceived that AI will be quite different and that it'll control culture, access to health and welfare, things like that. And so we think that the sort of state interests will play a much bigger role in the ultimate location of where all this occurs."

Watch the video above to also find out how companies are spending on AI.

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This post was written by Melanie Riehl