Synthetic data generation market seen hitting $3.5 billion by 2031

Allied Market Research says the synthetic data generation market will expand from $168.9 million in 2021 to $3.5 billion by 2031, driven by rising demand for AI training data, digital transformation and cloud adoption. North America led revenue in 2021, while Asia-Pacific is expected to post the fastest growth.

Why it matters: - Synthetic data helps companies train AI models without relying only on real-world data, which can be expensive, limited or sensitive. - The market’s projected jump signals broader demand for tools that support automation, privacy-aware data use and faster AI development.

What happened: - Allied Market Research projected the synthetic data generation market will rise from $168.93 million in 2021 to $3.5 billion by 2031. - The report said the market is expected to grow at a 35.8% CAGR from 2022 to 2031. - The report was published June 16, 2026. - A sample of the research report is available online.

The details: - Deep learning adoption has accelerated use of synthetic data because successful models require large numbers of labeled observations. - Digital initiatives and more advanced IT infrastructure are creating more opportunities for synthetic data generation solutions. - By component, the solution segment held the largest market share in 2021 and is expected to keep leading during the forecast period. - The services segment is projected to see the fastest growth as companies look to improve software implementation, raise the value of existing installations and cut deployment cost and risk. - By deployment mode, on-premise accounted for the largest share in 2021. - By data type, tabular data led the market in 2021. - By application, AI training and development was the largest segment in 2021. - By industry vertical, IT and telecommunications generated the most revenue in 2021. - North America held the largest market share in 2021. - Asia-Pacific is expected to grow the fastest during the forecast period, supported by higher adoption of AI, big data, IoT and cloud-based solutions and services. - COVID-19 increased interest in AI-driven synthetic data generation as remote work expanded and businesses adjusted processes. - Post-pandemic, companies are expected to focus more on advanced planning, end-to-end stock visibility, supplier monitoring and process automation. - The report said disruptions such as school, office and factory shutdowns, work-from-home shifts and social distancing increased demand for technologies that help organizations operate through difficult periods. - COVID-19 also increased mobile and internet use and wider computing adoption, which the report said should support future market growth.

Between the lines: - The report points to synthetic data as a practical answer to data access and labeling bottlenecks in AI. - The regional outlook suggests mature demand in North America and faster adoption in Asia-Pacific as cloud and AI use spreads. - The services growth outlook suggests buyers want help not just buying tools, but deploying and optimizing them.

Whats next: - The report expects demand to remain strong as enterprises invest in AI, automation and more resilient operations. - The market’s growth will likely depend on how quickly organizations expand AI workloads and adopt cloud-based data tools. - The report lists major market players including Amazon.com, CVEDIA, Datagen, Gretel Labs, IBM, Meta, Microsoft, Mostly AI, NVIDIA and Synthesis AI.

The bottom line: - Synthetic data generation is moving from a niche AI support tool to a faster-growing market tied to enterprise automation, privacy needs and broader AI adoption.