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Guidehouse Insights Estimates Smart City AI Revenue Will Reach $6.5 Billion by 2032

Market barriers include municipal procurement practices, privacy and cybersecurity concerns

BOULDER, Colo., March 21, 2023 /PRNewswire/ — A new report from Guidehouse Insights analyzes the market for artificial intelligence (AI) and predictive analytics platforms for transportation, energy management, and environmental quality in the urban environment.

AI offers a path to meaningful utilization of the growing amounts of municipal data. Cities are facing increasing environmental problems from climate change at the same time more government funding has become available. The recent passage of infrastructure and climate investment programs in key markets like the US and Europe will further boost the AI market space. According to a new report from Guidehouse Insights, annual smart city AI sales revenue will grow from $693.3 million in 2023 to $6.5 billion by 2032, representing a compound annual growth rate (CAGR) of 28.2%.

“In the coming decade, as climate challenges increase, deployment of data colleting IoT devices expands, and cities become familiar with the outcomes that can be achieved through AI systems, the market is expected to grow substantially,” says Grant Samms, research analyst with Guidehouse Insights. “AI’s ability to process large amounts of data from diverse sources makes it a useful tool in addressing difficult, sticky problems, which have many interacting factors that may be difficult to detect manually.”

AI can be a key tool in solving problems that would otherwise be difficult or impossible to address. To date, smart cities have used AI for sustainability mostly in three segments: transportation, energy management, and environmental quality. The largest barriers to AI adoption are municipal procurement practices, which are not designed to accommodate many AI companies’ pricing models, and concerns from residents about how cities will protect their privacy and how they will manage these new technologies’ IT and cybersecurity demands, according to the report.

The report, AI for Sustainable Cities, finds that the AI market should experience substantial growth in the coming decade as climate challenges increase, deployment of IoT devices grows, and cities become familiar with the outcomes that AI systems can achieve. The recent passage of infrastructure and climate investment programs in key markets (US and Europe) will further boost the AI market. An executive summary of the report is available for free download on the Guidehouse Insights website.

About Guidehouse Insights

Guidehouse Insights, the dedicated market intelligence arm of Guidehouse, provides research, data, and benchmarking services for today’s rapidly changing and highly regulated industries. Our insights are built on in-depth analysis of global clean technology markets. The team’s research methodology combines supply-side industry analysis, end-user primary research, and demand assessment, paired with a deep examination of technology trends, to provide a comprehensive view of emerging resilient infrastructure systems. Additional information about Guidehouse Insights can be found at

About Guidehouse
Guidehouse is a leading global provider of consulting services to the public sector and commercial markets, with broad capabilities in management, technology, and risk consulting. By combining our public and private sector expertise, we help clients address their most complex challenges and navigate significant regulatory pressures focusing on transformational change, business resiliency, and technology-driven innovation. Across a range of advisory, consulting, outsourcing, and digital services, we create scalable, innovative solutions that help our clients outwit complexity and position them for future growth and success. The company has over 16,500 professionals in over 55 locations globally. Guidehouse is a Veritas Capital portfolio company, led by seasoned professionals with proven and diverse expertise in traditional and emerging technologies, markets, and agenda-setting issues driving national and global economies. For more information, please visit

* The information contained in this press release concerning the report, AI for Sustainable Cities, is a summary and reflects the current expectations of Guidehouse Insights based on market data and trend analysis. Market predictions and expectations are inherently uncertain and actual results may differ materially from those contained in this press release or the report. Please refer to the full report for a complete understanding of the assumptions underlying the report’s conclusions and the methodologies used to create the report. Neither Guidehouse Insights nor Guidehouse undertakes any obligation to update any of the information contained in this press release or the report.

For more information, contact:

Cecile Fradkin for Guidehouse Insights
[email protected] 

SOURCE Guidehouse Insights

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