The use of alternative data by investors and hedge fund managers is growing rapidly, even faster than the artificial intelligence (AI) industry. Alternative data is non-traditional information, like product reviews, credit card transactions, and social media comments, used to understand a company’s performance better and gain a competitive advantage in the market.
The global alternative data market generated $3.23 billion in revenue last year, and it is expected to reach $4.74 billion in 2023, showing a significant 46.7% increase year-over-year. Moreover, the market is projected to grow by a compound annual growth rate (CAGR) of 41.4% in the next four years, reaching a value of $18.94 billion by 2027.
This growth is more impressive compared to the AI industry, which is also expanding rapidly. However, the value of the global AI industry is projected to grow by a four-year CAGR of 17.3%, reaching $738.8 billion by 2030.
Around 38% of hedge fund managers using alternative data believe it will become widely adopted in the next three to five years, and another 30% expect this to happen in the next seven to ten years. Only 8% of respondents do not think alternative data will become mainstream. More than two-thirds of market leaders are already using alternative data to generate better investment performance.
Overall, the alternative data market is experiencing substantial growth and attracting significant interest from investors and financial professionals.