Global demand for alternative data is surging at an unprecedented rate, outpacing the growth of artificial intelligence (AI) in the financial sector, according to data presented by AltIndex.com. The report shows that global alternative data revenues are expected to reach nearly $19 billion by 2027, growing two and a half times faster than the AI industry.
In the past, investors and hedge fund managers mainly relied on data from SEC filings and quarterly earnings to make informed investment decisions. However, recent years have witnessed a significant increase in the demand for alternative data as a powerful tool for investment growth and generating alpha.
Alternative data goes beyond traditional financial reports and statements, providing additional data points that offer a more comprehensive picture of a company’s performance. This includes information such as product reviews, credit card transactions, satellite imagery, and social media comments. Such innovative and non-traditional data sources give investors a competitive edge in the market.
The global alternative data market generated $3.23 billion in revenue last year, and this figure is expected to reach $4.74 billion by 2023, reflecting a massive 46.7% increase year-over-year. The growth rate is set to remain impressive in the coming years, with a projected compound annual growth rate (CAGR) of 41.4% through 2027, reaching a value of $18.94 billion.
Comparatively, the growth of the alternative data market surpasses that of the AI industry. The global AI industry value is projected to increase from $241.8 billion in 2023 to $738.8 billion by 2030, with a four-year CAGR of 17.3%.
A survey conducted by the Alternative Investment Management Association and SS&C revealed that over half of investment firms already use alternative data. With more companies investing in technology, this number is expected to grow in the coming years. The survey also showed that around 38% of hedge fund managers using alternative data believe it will become widely adopted within the next three to five years.
Despite the positive outlook, some experts remain skeptical. Eight percent of respondents in the survey did not think alternative data would become mainstream, while another 30% believed it would take between seven and ten years for widespread adoption.
It is evident that alternative data is revolutionizing the investment landscape by providing valuable insights beyond traditional financial data. As technology continues to advance and data-gathering technologies improve, the demand for alternative data is expected to grow exponentially, enabling investors to make more informed and profitable decisions in an increasingly competitive market.
In conclusion, the global demand for alternative data is surging, outpacing the growth of AI in the financial sector. The market is expected to quadruple in the coming years, reaching a value of nearly $19 billion by 2027. As investors seek new ways to gain a competitive advantage, alternative data is proving to be a powerful tool for generating alpha and driving investment growth. The future looks promising for the alternative data market as technology continues to evolve, making it accessible and valuable to a wider range of investors.
