AI in IoT Market Outlook:
AI in IoT Market size was valued at USD 93.6 billion in 2025 and is projected to reach USD 169.2 billion by the end of 2035, rising at a CAGR of 6.8% during the forecast period, i.e., 2026-2035. In 2026, the industry size of AI in IoT is assessed at USD 99.9 billion.
The artificial intelligence in IoT market is poised for extensive growth over the upcoming years due to increasing adoption of smart devices, advancements in machine learning, and heightened demand for intelligent automation across industries. In this regard, the article published by NIST in September 2025 observed that federal research investments in IoT infrastructure have the complete potential to deliver a 10 to 20 times increased return, which reflects the strong economic and national competitiveness benefits. It also underscored that the research identified 11 federal investment areas that needed to address short, medium, and long-term infrastructure gaps, which are limiting adoption. The study also underscored the role of AI by noting that IoT provides data for AI models, whereas AI enhances IoT system intelligence and responsiveness. NIST concluded that a coordinated government approach positions the U.S. well to strengthen IoT infrastructure and long-term innovation capacity.
Furthermore, organizations across the globe are leveraging AI-enabled IoT systems to gain real-time insights, improve operational efficiency, enhance predictive maintenance, and support data-driven decision-making. In this context the as of March 2025, the U.S. Department of Homeland Security reported that its SCITI Labs initiative applies smart city and IoT technologies to strengthen public safety and critical infrastructure resilience through validated, real-world deployments. The program has supported use cases such as intelligent building sensor suites, low-cost flood sensors, and wildfire detection systems, which also include 200 early-stage wildfire sensors deployed across the U.S., Canada, and Germany, enabling detection within 30 to 60 minutes of ignition. By partnering with public agencies and industry, SCITI Labs accelerates the transition of tested IoT solutions into operational environments, hence positively impacting AI in IoT market.
