Global Alternative Data Market Expected to Quadruple to $19bn by 2027
Investors and hedge fund managers are increasingly turning to alternative data as a powerful tool for making informed investment decisions. In recent years, there has been a surge in demand for alternative data, which is projected to quadruple and reach nearly $19bn by 2027, according to data from AltIndex.com. This growth rate is more than two and a half times faster than the artificial intelligence (AI) industry.
Alternative data refers to non-traditional information that goes beyond standard financial reports and statements, providing additional data points to gain a competitive edge in the market. This can include product reviews, credit card transactions, satellite imagery, social media comments, and other innovative sources. It offers a comprehensive picture of a company’s performance.
The global alternative data market generated $3.23bn in revenue last year, and this figure is expected to increase by 46.7% to $4.74bn in 2023. Furthermore, the market is projected to grow at a compound annual growth rate (CAGR) of 41.4% over the next four years, reaching a value of $18.94bn by 2027.
The growth of the alternative data market is even more impressive compared to the AI industry. While AI has garnered significant attention since the launch of ChatGPT, its value is projected to grow from $241.8bn to $738.8bn between 2023 and 2030, resulting in a four-year CAGR of 17.3%.
A recent survey conducted by AIMA and SS&C revealed that over half of investment firms currently utilize alternative data, and this number is expected to rise as more companies invest in technology. The survey indicated that 38% of hedge fund managers using alternative data believed it would be widely adopted within the next three to five years. Another 30% anticipated mainstream adoption within seven to ten years, while only eight percent did not foresee its widespread use.
Alternative data provides market leaders with the opportunity to generate outperformance and gain a competitive advantage. By leveraging non-traditional sources of information, companies can make more informed investment decisions and uncover valuable insights.
As the demand for alternative data continues to grow and technologies for data gathering improve, it is clear that this field will play a crucial role in the investment landscape. Its high growth rate and potential for generating alpha make it an attractive option for investors seeking to maximize their returns.
In conclusion, the global alternative data market is experiencing significant growth and is projected to be worth nearly $19bn by 2027. This surge in demand, coupled with advancements in data-gathering technologies, has expanded the scope and accessibility of alternative data. As investors increasingly recognize its value, alternative data is expected to become a mainstream tool for making informed investment decisions.
