Explainable AI Market 2025 | Growth Drivers, Key Players & Investment Opportunities

Market Size and Growth

Explainable AI Market reached US$ 5.2 Billion in 2023 and is expected to reach US$ 22.1 Billion by 2031, growing with a CAGR of 20.2% during the forecast period 2024-2031.

Key Development:

✅ In March 2025, OpenAI announced a major infrastructure deal with CoreWeave-acquiring US $350 million in shares and securing long-term compute support valued at US $11.9 billion over five years, enhancing capacity for advanced AI workloads, including explainability-focused models.

✅ In January 2025, the Stargate Project-a US infrastructure mega-initiative valued at up to US $500 billion over four years was formally launched. It's backed by OpenAI, SoftBank, Oracle and others, aiming to fuel the compute backbone for powerful AI, including explainable systems

✅ Ongoing R&D (since ~2022-2025) under Japan's NEDO program includes multiple projects targeting explainable AI: such as EXAIT (self-explanation learning support), modular deep-learning explainability, and XAI for autonomous interaction, supported by universities and industry.

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Explainable AI (XAI) refers to artificial intelligence systems designed to make their decision-making processes transparent, understandable, and interpretable to humans. Unlike "black-box" models, XAI provides insights into how and why an AI system arrives at specific predictions or outcomes, enabling trust, accountability, and compliance with regulations. It is increasingly important in sectors like healthcare, finance, defense, and autonomous systems, where transparency and ethical AI use are critical for adoption and reliability.

United States: AI-Related Mergers & Acquisitions

✅ In August 2025, private equity firm Thoma Bravo announced a deal to acquire Verint Systems known for its AI-powered customer engagement platform for approximately $2 billion including debt. The move underscores strategic bets on AI-enhanced customer experience technologies.

✅ In May 2025, Salesforce disclosed plans to acquire Informatica for about $8 billion, aiming to integrate premier data management capabilities into its AI-driven enterprise services suite. This is a pivotal step toward enriching AI models with better data governance.

✅ In April 2025, IBM acquired Seek AI (terms undisclosed), a firm specializing in natural language to data agents for regulated sectors like finance and retail. This bolsters IBM's watsonx platform with enhanced domain-specific AI reasoning.

Global / Other Regions: Strategic AI M&A Moves

✅ In May 2025, OpenAI acquired Windsurf (formerly Codeium) for approximately $3 billion. The acquisition brings AI-native integrated development environment (IDE) capabilities into OpenAI's ecosystem.

✅ In March 2025, ServiceNow acquired Moveworks for $2.85 billion (cash + stock). Moveworks offers AI assistants for enterprise support functions enhancing workflow automation within ServiceNow's AI-first service management strategy.

Key Players:

-> Kyndi, Alphabet, Inc., IBM Corporation, Microsoft Corporation, Amelia US LLC, BuildGroup, DataRobot, Inc., Ditto AI Ltd, DarwinAI and Factmata.

Growth Forecast Projected:

The Global Explainable AI Market is anticipated to rise at a considerable rate during the forecast period, between 2024 and 2031. In 2023, the market is growing at a steady rate, and with the rising adoption of strategies by key players, the market is expected to rise over the projected horizon.

Research Process:

Both primary and secondary data sources have been used in the global Explainable AI Market research report. During the research process, a wide range of industry-affecting factors are examined, including governmental regulations, market conditions, competitive levels, historical data, market situation, technological advancements, upcoming developments, in related businesses, as well as market volatility, prospects, potential barriers, and challenges.

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Key Segments:

By Offering: Solution, Services

By Deployment: Cloud, On-premises

By Organization Size: Small and Medium-sized Enterprises, Large Enterprises

By Technology: Machine Learning (ML), Natural Language Processing (NLP), Computer Vision, Big Data Analytics, Others)

By Application: Fraud and Anomaly Detection, Drug Discovery and Diagnostics, Predictive Maintenance, Supply Chain Management, Identity and Access Management, Others

By End-User: Healthcare, BFSI, Aerospace and Defense, Retail and E-commerce, Public Sector and Utilities, IT and Telecommunication, Automotive, Others

Regional Analysis for Explainable AI Market:

⇥ North America (U.S., Canada, Mexico)

⇥ Europe (U.K., Italy, Germany, Russia, France, Spain, The Netherlands and Rest of Europe)

⇥ Asia-Pacific (India, Japan, China, South Korea, Australia, Indonesia Rest of Asia Pacific)

⇥ South America (Colombia, Brazil, Argentina, Rest of South America)

⇥ Middle East & Africa (Saudi Arabia, U.A.E., South Africa, Rest of Middle East & Africa)

Benefits of the Report:

Chapter 1: Sets the stage by outlining the report's coverage, summarizing key market segments by region, product type, and application. Presents a snapshot of market sizes, growth potential across segments, and anticipated industry evolution both short and long term.

Chapter 2: Highlights pivotal market insights and uncovers the most significant emerging trends driving change within the industry.

Chapter 3: Offers an in-depth look at the competitive landscape among Explainable AI producers, including revenue shares, strategic moves, and recent mergers and acquisitions.

Chapter 4: Presents comprehensive profiles of the market's key players, delving into details such as revenue, profit margins, product portfolios, and company milestones.

Chapters 5 & 6: Analyze Explainable AI revenue at both regional and country levels, providing quantitative breakdowns of market sizes, growth opportunities, and development prospects worldwide.

Chapter 7: Focuses on different market segments by type, examining their individual sizes and potential, guiding readers toward high-impact, untapped market areas.

Chapter 8: Explores segmentation by application, evaluating industry growth potential in various downstream markets and pinpointing promising sectors for expansion.

Chapter 9: Provides a thorough review of the industry's supply chain mapping out both upstream and downstream activities.

Chapter 10: Concludes with a summary of the report's key findings and highlights the most critical takeaways for industry stakeholders.

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FAQ

What is the current size of the Explainable AI Market?

A: In 2023, the Explainable AI Market was valued at US$ 5.2 Billion, reflecting its strong industry presence.

Q2: How large is the Explainable AI Market expected to be by 2031?

A: By 2031, industry forecasts suggest the Explainable AI Market will grow to around US$ 22.1 Billion, demonstrating significant expansion.

Q3: What is the growth rate of the Explainable AI Market?

A: The market is projected to expand at a compound annual growth rate (CAGR) of 20.2% during the forecast period from 2024 to 2031.

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