Report: AI Adoption Rises, Alt-Data Spend Stagnates
While enterprise AI adoption is rising, spending on alternative data vendors has not kept pace, according to a new report from Neudata. The analysis found that firms are primarily using AI for productivity gains rather than investment optimization. The report estimates that overall spending on alt-data rose 17% to $2.8 billion in 2025.
- The Neudata report highlights that while AI adoption nearly doubled among investment firms in the past year, the primary use is for enhancing internal productivity and workflow efficiency, cited by 66% of respondents, rather than directly optimizing investment strategies (31%). - Despite the overall market growth, the average number of investment firms using any single alternative dataset has decreased, suggesting less "crowding" and potentially more unique alpha opportunities for firms that can successfully integrate novel data. - Key challenges hindering broader alternative data adoption include difficulties with data integration due to diverse formats, price negotiations, and concerns over data quality, with only a quarter of dataset trials converting to paid subscriptions. - The types of alternative data in highest demand have shifted, with information technology and consumer discretionary datasets now being the most sought-after categories, reflecting a pivot toward understanding macroeconomic uncertainty and the impact of AI. - Alternative data encompasses a wide range of non-traditional sources, including credit card transactions, satellite imagery of retail parking lots, social media sentiment, web-scraped pricing information, and geolocation data from smartphones. - Integrating alternative data presents significant technical hurdles, such as the need for complex ETL processes to handle varied data formats and frequencies, and the necessity of custom models to avoid misleading signals. - Looking ahead, the alternative data market is projected to expand significantly, with some estimates forecasting a market size between $8.6 billion and $39.9 billion by 2030, depending on regulatory developments and technological advancements. - While 89% of enterprises report having adopted AI tools, a significant "visibility gap" exists, with 67% of organizations admitting they lack complete insight into which AI tools their employees are using, leading to governance and security risks.
