Prompt Engineering Market Size, Share & Trends Analysis Report By Component (Software, Services), By Technique (n-Shot, Generated Knowledge), By Application, By Industry, By Region, And Segment Forecasts, 2024 - 2030

Prompt Engineering Market Size & Trends

The global prompt engineering market size was estimated at USD 222.1 million in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 32.8% from 2024 to 2030. The market is driven by various factors, such as technological advancements in fields like generative Artificial Intelligence (AI) and the growing digitalization and automation among various industries. The growing adoption of AI, especially Natural Language Processing (NLP), is boosting the demand for prompt engineers. This is likely to drive the demand for prompt engineering tools and services.

AI prompts are queries or inputs given to the Large Language Models (LLMs) to derive a specific response from the model. Prompt engineering is a process of designing and optimizing prompts to obtain relevant and accurate responses from LLMs. Prompt engineering reduces post-processing by achieving optimized outputs from LLMs and improves generative AI output quality.

Industries such as healthcare, Banking, Financial Services, and Insurance (BFSI), and retail & e-commerce, among others, have various use cases where prompt engineering can be utilized. Prompt engineering can be used to track shipments, prevent fraud, and optimize shipping routes in the logistics industry. Similarly, in the healthcare industry, prompt engineering can be used to extract insights relevant to drug discovery, diagnostics, and research. Tailor-made prompts as per patient data can enable personalized recommendations. Hence, the growing adoption of advanced technologies such as AI and Machine Learning (ML) among these industries to enhance the scalability and efficiency of their operations is expected to drive the demand for market-related software and services.

Prompt engineering serves various applications, including content generation, problem-solving, and language translation, among others. It helps generative AI models respond to a wide range of queries, including simple and highly technical ones. Good prompts can improve the results of generative AI models. Different prompt engineering techniques can help generative AI models minimize confusion and biases and improve response accuracy. Hence, the growing investments in generative AI are likely to drive the adoption of prompt engineering tools and services. 

Government agencies are investing in AI research, which is likely to impact the market positively. For instance, in October 2023, the U.S. National Science Foundation, a U.S. federal agency, announced USD 10.9 million to support AI research and drive advances while ensuring user safety. Such investments are likely to improve the need for market-related tools and services as with advancements in AI.

Market Concentration & Characteristics

The market growth stage is high, and the pace of the market growth is accelerating.  The market is fragmented, with the presence of numerous market players. The target market is characterized by a high degree of innovation owing to rapid advancements in AI and ML technologies. Recent years, especially since 2020, have seen tremendous advancements in prompt engineering to address complex challenges, such as domain-specific language understanding and multimodal inputs. The launch of new AI models, such as ChatGPT in 2022 and Large Language Model Meta AI (LLaMA) Bard in 2023, have driven significant advancements in prompt engineering.

The target market is also characterized by a high number of product launches by the leading players. For instance, Salesforce, Inc., Amazon Web Services, Inc. (Amazon.com, Inc.), and xAI Corp launched prompt engineering software tools in 2023. Several prompt marketplaces and software solution providers, such as PromptBase, PROMPTMETHEUS, and Vocify Inc. dba Vellum, among others, have entered the market in 2022 or 2023, reflecting possibilities of new product launches over the forecast period.

The target market is also subject to increasing regulatory scrutiny. The growing concerns about data privacy globally are likely to impact the generative AI industry. As target market tools are used to generate output from generative AI models, increasing regulatory scrutiny and concerns about the use of generative AI are also likely to impact the target market.

While there is restricted availability of direct product substitutes for target market solutions, rule-based systems, and traditional scripting approaches can affect the adoption of prompt engineering solutions. Moreover, the highly dynamic and nascent stage of the target market can mean the introduction of newer technologies that may replace prompt engineering.

Many industries, including healthcare, retail, IT & telecommunication, BFSI, and automotive & transportation, among others, are adopting generative AI technologies, which are having a positive impact on the market. The adoption of advanced technologies, such as AI and ML, helps companies automate tasks and enhance efficiency.

Component Insights

Based on components, the market is classified into software and services, and the software segment dominated the market with a share of over 71.0% in 2023. The segment’s growth is due to a growing number of companies offering prompt engineering software tools, such as Integrated Development Environments (IDEs) and prompts. PROMPTMETHEUS, a Portugal-based company, offers Prompt IDE, which enables prompt development.

In addition, new launches of software tools are expected to drive the segment’s growth. In November 2023, xAI Corp, a U.S.-based AI company, announced the launch of xAI PromptIDE, an IDE for prompt engineering. The IDE enables the implementation of complex prompting techniques, accelerating the development and optimization of prompts.

The services segment is expected to register a significant CAGR over the forecast period. The segment’s growth can be attributed to the growing need among end-use industries to drive business transformation and enhance operational efficiency. Services in the market include training services and prompt engineering services. Prompt engineering services include various services, such as prompt design, development, fine-tuning, and consulting. A3Logics, a U.S.-based company, and Curved Stone Limited, a UK-based company, offer these services. The growing need for prompt engineers is driving the need for training services, contributing to the segment growth.

Application Insights

Based on application, the market has been segmented into content generation, conversational AI, recommendation systems, software development, and others. The content generation segment held the largest share in 2023. The need to meet the rising demand for new content and automate time-consuming tasks drives the segment’s growth. Prompts aid the AI model in generating various text formats, such as musical compositions, emails, book descriptions, and blog articles, among others, by providing contexts and constraints. Prompt engineering helps in creating desired content. AI content generators can generate unlimited articles without assistance. Moreover, they can be utilized by marketers to create efficient marketing strategies.

The recommendation systems segment is expected to register a significant CAGR from 2024 to 2030. The segment’s growth is attributed to the growing need among businesses across industries to improve customer retention and engagement by suggesting customers products based on their purchase history. Prompting recommendation engines with user profiles, specific user attributes, and other contexts can help in personalizing suggestions and making the AI model outputs more accurate. This is likely to drive the adoption of market-related tools and services to fine-tune prompts for recommendation system applications.

Industry Insights

The BFSI segment held the largest market share in 2023. The need to improve customer satisfaction, secure data, and prevent fraudulent activities in the BFSI sector is driving the adoption of AI and ML, positively impacting the target market growth. Moreover, the rapid digitalization of businesses in the BFSI sector is driving the segment's growth. According to Accenture's research, the BFSI sector has a high potential for automation and augmentation. Prompt engineering can serve various use cases in the BFSI sector, such as simplifying transaction workflows and providing personalized investment recommendations, driving the adoption of the target markets' tools and services.

The media & entertainment segment registered a significant CAGR over the forecast period. The growing adoption of generative AI to enhance advertising campaigns and generate creative content is driving the segment's growth. Generative AI models can be utilized to create original content, such as text, videos, and images, which is useful for use in advertising, entertainment, and creative arts. AI enables creators and journalists to enhance work efficiency by automating tedious tasks. Netflix, a U.S.-based streaming service company, uses AI recommendation algorithms to recommend content to viewers based on their viewing history and preferences. As prompt engineering can be used in recommendation systems, the market is likely to witness significant growth in the media & entertainment industry.

Technique Insights

Based on techniques, the market is classified into n-shot prompting, generated knowledge prompting, chain-of-thought prompting, and others. The n-shot prompting segment held the largest market share in 2023. This can be attributed to the need for techniques that generate results quickly from LLMs, such as ChatGPT and Bard. Moreover, the need to generate output from LLMs with minimal data contributes to segment growth. Zero-shot prompting aids the model in generating output about unseen data without additional training. Whereas one-shot prompting involves providing a single template or an example, and few-shot prompting generally involves providing between two to five examples to generate output from an AI model.

The chain-of-thought prompting segment registered the fastest CAGR from 2024 to 2030. The segment’s growth can be attributed to the need for accurate responses and the need to solve complex problems. The chain-of-thought technique enhances the reasoning ability of the AI model by breaking down a complex problem into smaller parts, representing a train of thought. This method helps an AI model solve questions in steps rather than directly arriving at the solution. Providing the model with the explanation to arrive at a solution enhances the reasoning ability and enhances the accuracy of the model.

Regional Insights

North America dominated the market and accounted for over 34.0% share in 2023. The growth of the regional market is attributable to the presence of prominent market players, such as two U.S.-based companies, Salesforce, Inc. and Amazon Web Services, Inc. (Amazon.com, Inc.). The region has a presence of numerous AI and ML startups, driving advancements in the Research and Development (R&D) of these technologies. This is contributing to the need for prompt engineering tools and services in the region. Moreover, growing AI investments in the region are driving market growth. For instance, in September 2023, Scale AI, an AI Global Innovation Cluster of Canada, announced an investment of over USD 20 million for five AI projects. 

Asia Pacific is anticipated to witness the fastest growth in the target market. The market’s growth in the region can be attributed to the developing technological infrastructure in the region. Moreover, the region is witnessing growing investments in the digital sector. According to the United Nations ESCAP, the internet market in the region is expected to grow to USD 436 billion by 2026. The COVID-19 pandemic accelerated technology adoption across industries in the region, which is driving the growth of the market in Asia Pacific. The release of ChatGPT by OpenAI has led to the acceleration of AI deployment by Asian governments. The development and launch of indigenous AI models, such as Krutrim LLM, launched in India in December 2023, creates significant market growth opportunities. 

Key Prompt Engineering Company Insights

Some of the key players operating in the market include Salesforce, Inc., Amazon Web Services, Inc. (Amazon.com, Inc.), A3Logics, and PROMPTMETHEUS, among others.

• Salesforce, Inc. is a U.S.-based company offering a Customer Relationship Management (CRM) platform. The company offers a Prompt Builder tool that helps users design and fine-tune prompts and get desired responses from an LLM. The company has a global presence with 110 offices across North America, Latin America, Europe, Asia Pacific, and Middle East & Africa (MEA).

• Amazon Web Services, Inc. (Amazon.com, Inc.) is a U.S.-based company that offers cloud computing services. The company offers over 200 services for numerous industries, technologies, and use cases. The company offers Amazon Bedrock service that supports generative AI application development and also supports prompt engineering management. Agents for Amazon Bedrock enables prompt creation and automatically designs templates from user instructions, knowledge bases, and action groups.

Curved Stone Limited and Vocify Inc. dba Vellum are some of the emerging market participants in the target market.

• Curved Stone Limited is a UK-based software development company offering various digital services. The company offers services such as prompt engineering services, training services, and idea validation & design services, among others. It engineers prompts for its clients and its WorkflowGPT platform. The company helps clients to leverage the full potential of LLMs.

• Vocify Inc. dba Vellum, a U.S.-based company, offers a development platform for building applications on LLMs. The development platforms provide tools for quantitative testing, performance monitoring, semantic search, and prompt engineering. The platform enables prompt performance comparison using multiple LLMs and test cases & quantitative evaluation.

Recent Developments

• In December 2023, Vocify Inc. dba Vellum announced the launch of Execute Prompt and Execute Prompt Stream, two production-grade APIs to invoke user prompts in the company’s platform. These APIs give the users access to new features and aid them in prompt engineering.

• In September 2023, Amazon Web Services, Inc. (Amazon.com, Inc.) announced the availability of Amazon Bedrock, a fully managed service for prompt engineering for generative AI applications through an Application Programming Interface (API) using language models. Agents for Amazon Bedrock enables automatic prompt creation, saving experimenting time for different foundation models or very large ML models.

• In September 2023, Salesforce, Inc. announced the launch of Prompt Builder, a low-code prompt management tool. The tool enables building, testing, and fine-tuning of trusted AI prompts. Moreover, the company’s secure AI architecture, Einstein Trust Layer, aids in protecting sensitive information and limits toxicity and bias.

Prompt Engineering Market Report Scope

Global Prompt Engineering Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2022 to 2030. For this study, Grand View Research has segmented the global prompt engineering market report based on component, technique, application, industry, and region.

• Component Outlook (Revenue, USD Million, 2022 - 2030)

  • Software

  • Services

    • Prompt Engineering Services

    • Training

• Technique Outlook (Revenue, USD Million, 2022 - 2030)

  • n-Shot Prompting

  • Generated Knowledge Prompting

  • Chain-of-Thought Prompting

  • Others

• Application Outlook (Revenue, USD Million, 2022 - 2030)

  • Content Generation

  • Conversational AI

  • Recommendation Systems

  • Software Development

  • Others

• Industry Outlook (Revenue, USD Million, 2022 - 2030)

  • Healthcare

  • BFSI

  • Automotive & Transportation

  • Media & Entertainment

  • Retail

  • IT & Telecommunication

  • Others

• Regional Outlook (Revenue, USD Million, 2022 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • UK

    • Germany

    • France

  • Asia Pacific

    • India

    • China

    • Japan

    • South Korea

    • Australia

  • Latin America

    • Brazil

    • Mexico

  • Middle East and Africa (MEA)

    • KSA

    • UAE

    • South Africa