Bain & Company predicts that as artificial intelligence (AI) technology rapidly permeates and disrupts businesses and economies, the global market for AI-related products is ballooning, reaching $990 billion by 2027.

The consulting firm said in its fifth annual Global Technology Report released on Wednesday that the AI market, including related services and hardware, will grow by 40% to 55% annually on last year's $185 billion.

Bain said this would bring in revenues of $780 billion to $990 billion.

This growth trend is mainly driven by larger and more advanced AI systems and data centers, as well as the increasing adoption of AI technology by businesses and governments to improve efficiency.

Bain said that such rapid demand growth will put pressure on the supply chain of components, including chips needed to run these services.

Bain warned that, coupled with geopolitical tensions, the AI boom could trigger shortages of semiconductors, personal computers, and smartphones.

Bain said that by 2026, demand for upstream chip components such as integrated circuit design and related intellectual property could grow by 30% or more, putting pressure on manufacturers.

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The report said that the cost of large data centers could jump from the current $1 billion to $4 billion to $10 billion to $25 billion within five years, as capacity expands from the current 50-200 megawatts to over 1000 megawatts.

Bain said: "These changes are expected to have a significant impact on the ecosystem supporting data centers, including infrastructure engineering, power production, and cooling."

Bain said that companies are moving beyond the experimental phase and beginning to expand generative AI in their businesses.

Small language models, similar to large language models like OpenAI's ChatGPT chatbot, but lightweight and efficient, may be favored by businesses and governments because they are concerned about costs and data privacy.

Countries including Canada, France, India, Japan, and the United Arab Emirates are spending billions of dollars to subsidize the sovereign AI industry, investing in local computing infrastructure and AI models created and trained with local data within their borders.

But Anne Hoecker, head of Bain's global technology business, said that building a successful sovereign AI ecosystem is both time-consuming and expensive.