The Augmented Reality and Virtual Reality Market size was valued at USD 22.12 billion in 2024 and is expected to reach USD $96.32 billion by 2029, growing at a CAGR of 34.2% during the forecast period 2024 to 2029.

Rapid growth of AR and VR applications in the gaming and entertainment industry are the major drivers of the augmented and virtual reality market. This is attributed to AR delivering uncommon combination that refashions how people relate with the digital content and VR enhancing the performance, compactness, and comfort such as Apple Vision Pro, Meta Quest 3. Furthermore, the growing implementation of government initiatives and investments towards AR and VR technologies provides growth opportunities in the augmented reality and virtual reality market. For instance, In September 2023, a UK-based holographic company Envisics, that manufactures in-car technology that projects navigation and safety alerts on the windscreen rose to USD 100 million in its Series C round is expected to help AR head-up displays reach commercialization over the forecast period.

The major use cases of AI/Gen AI in the augmented and virtual reality market includes content creation, object recognition and tracking, user interaction, intelligent virtual assistants and spatial mapping. AI-enhanced content creation empowers the fast and easy generation of quality assets, environments, and interactions that provide more immersive and dynamic AR and VR experiences. AI-driven object recognition and tracking boost interactivity and realism several-fold by ensuring that virtual elements fit well into the real world—key to gaming, training, and industrial applications. Besides, AI enhances user interaction with intuitive and responsive interaction through natural language processing, gesture recognition, and adaptive interfaces that give better user engagement. Other benefits are AI-powered virtual assistants that can provide personalized aid and learn; however, their full potential is again limited because of technological and integrational challenges. Finally, spatial mapping enhanced by AI is required in the development of most immersive AR and VR experiences, since it accurately perceives and reconstructs physical environments; in this regard, spatial awareness drives applications like navigation, gaming, and training.