Austin, Aug. 18, 2025 (GLOBE NEWSWIRE) — According to the SNS Insider report, the Natural Language Understanding Market size was valued at USD 21.8 billion in 2024 and is projected to reach USD 108.2 billion by 2032, growing at a CAGR of 22.43% from 2025 to 2032.

The U.S. Natural Language Understanding market was valued at USD 2.7 billion in 2024 and is projected to reach USD 14.7 billion by 2032, growing at a CAGR of 23.75%. Growth is driven by widespread adoption of AI-powered customer service tools, increased healthcare digitization, and government AI initiatives.

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Key Players:

IBM CorporationGoogle LLCMicrosoft CorporationAmazon Web Services (AWS)SAS Institute Inc.Meta Platforms Inc.Apple Inc.Baidu Inc.Oracle CorporationSAP SE

Natural Language Understanding Market Report Scope:

Report AttributesDetailsMarket Size in 2024USD 21.5 BillionMarket Size by 2032USD 108.2 BillionCAGRCAGR of 22.43% From 2025 to 2032Base Year2024Forecast Period2025-2032Historical Data2021-2023Report Scope & CoverageMarket Size, Segments Analysis, Competitive  Landscape, Regional Analysis, DROC & SWOT Analysis, Forecast OutlookKey Segments•  By Offering (Solutions, Services)
• By Type (Rule-Based, Statistical, Hybrid)
• By Application (Chatbots & Virtual Assistants, Sentiment Analysis, Text Analysis, Customer Experience Management (CXM), Data Capture, Others)
• By End-Use (Retail & E-commerce, Healthcare & Life Sciences, BFSI, IT & Telecommunications, Media & Entertainment, Others)

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By Offering: Solutions Dominate, Services Grow Fastest

In 2024, the Solutions segment dominated the market, accounting for 69% of the Natural Language Understanding market share, primarily due to the extensive implementation of packaged and customizable software solutions within this segment. They are widely utilised in customer support systems, smart assistants, CRM tools, and enterprise analytics platforms. This capability to condense information into coherent phrases for large-scale text interpretation, plus the magic of showing sentiment in real-time, makes them invaluable to industry. As enterprises seek to integrate platforms equipped with powerful NLP models and low-latency processing capabilities, the solution segment is expected to maintain its lead in market revenue until 2032.

The Services segment is projected to grow at the fastest CAGR during 2025–2032. primarily be attributed to the dispersion of cloud-native architectures, the integration of third-party language models, and the continuous need for fine-tuning and trimming of models. In geographies where low-resource languages are to be supported, organizations have started outsourcing NLU customization, consulting, and training services. This segment will be augmented by the scalability and cost-efficiency of managed service providers.

By Type: Rule-Based Dominates, Statistical is Fastest Growing

In 2024, the Rule-Based segment dominated the Natural Language Understanding market and accounted for 46% of the revenue share. Its stronghold emanates from being reliable, transparent, and easy to deploy within domain-specific environments. In the case of highly regulated sectors like financial services, law, and healthcare, where deterministic and compliant outputs are non-negotiable, rule-based models can be especially beneficial. These models help set the language logic for a business, delivering predictable answers and easier audits.

The Statistical segment is expected to register the fastest CAGR during 2025–2032. Due to its dynamic learning of the language pattern from large datasets, the Statistical section is scheduled to report the fastest CAGR during 2025–2032. They provide higher sensitivity to complex sentence structures, shifts in sentiment, and ambiguous language. With the world of NLU moving toward personalization and real-time context updates, statistical models outshine their intuitive counterparts and—with deep learning leading the charge, we are seeing auto-scalable NLU deployments across the globe.

By Application: Chatbots & Virtual Assistants Lead and Grow Fastest

In 2024, the Chatbots & Virtual Assistants segment dominated the market and accounted for a significant revenue share, emerging as both the dominant and fastest-growing application area for NLU. These advanced bots are fast becoming customer support shifters, HR automation wizards, healthcare triagers, and virtual sales assistants. More and more businesses are pouring resources into conversational interfaces that can create human-like experiences using natural language processing features. Transformer models (e.g., BERT and GPT variants) have pushed contextual understanding and predictive accuracy to new highs.

This application will maintain its leadership through 2032, as enterprises further adapt their strategies to promote 24/7 fully-automated engagement in addition to language localization and omnichannel support. Chatbots and assistants will continue to dominate the NLU space because they can conduct complex queries, troubleshoot, and ultimately save operational costs.

By End-Use: Retail & E-commerce Dominates, IT & Telecommunications Grows Fastest

In 2024, the Retail & E-commerce segment dominated the market and accounted for a significant revenue share, using NLU in many ways to enhance the online shopping experience. Retailers use these tools to enable personalized suggestions, build automations to handle searches for products, understand user sentiment, and service requests through virtual agents. Product discovery based on natural language and multilingual support combined to enhance the reach and stickiness in global markets.

The IT & Telecommunications sector is forecast to register the fastest CAGR during 2025–2032.  NLU deployment is recommended by the industry for automating technical support, voice-based query interpretation, and customer feedback analysis. Telecom providers are using an NLU engine to integrate these with their existing chatbots and IVR systems to facilitate operations and improve satisfaction as the number of connected devices and demand for instantaneous changes is increasing.

By Region: North America Dominates, Asia-Pacific Grows Fastest

In 2024, North America dominated the Natural Language Understanding market and accounted for 41% of revenue share, due to early technology adoption, advanced R&D infrastructure in the region along with well-established presence of key market players including IBM, Google, Amazon, Microsoft etc. And with a high digital maturity and large-scale enterprise adoption of intelligent platforms in sectors including BFSI, government, and healthcare, this region makes an ideal ecosystem. Strong regulatory frameworks and substantial financial backing for AI research further strengthen the region’s pole position in NLU deployment.

Asia-Pacific is anticipated to record the fastest CAGR during the forecast period. such as those in China, India, and Southeast Asia, where rates of adoption and development of both public and enterprise-level AI applications are soaring. With its fragmented linguistic landscape, increasing access to the internet, and its domestic ecosystem of AI start-ups, the region is ideal for multilingual natural language understanding applications, fueling demand in education, e-commerce, and smart governance.

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USP’s:

Technology Adoption Trends – Rising use of emerging technologies like AI/ML, speech recognition, and sentiment analysis accelerates NLU integration across industries.Network & Infrastructure Enablement – Expanded 5G and edge infrastructure supports real-time NLU applications in voice assistants, chatbots, and customer support.Security & Compliance Drivers – Surge in data breaches increases demand for secure, GDPR/CCPA-compliant NLU models, especially in BFSI and healthcare sectors.Cloud Deployment Momentum – Growing adoption of cloud-native platforms boosts scalable, cost-effective NLU deployments with faster updates and global accessibility.

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