Australia Generative AI Market Size, Share and Outlook - Growth Analysis Report and Forecast Trends (2026-2035)

Market Overview

The Australia generative AI market is moving from pilots to scaled deployment. Large banks, software makers and agencies now run models in daily workflows, while global providers commit local compute so that sensitive workloads can stay onshore.

Three forces are shaping the market: policy, with the National AI Plan and a new AI Safety Institute; infrastructure, with Microsoft, Amazon and Anthropic each tying new capacity to Australian demand; and enterprise adoption, with the Australian Bureau of Statistics reporting in June 2026 that large businesses use AI at about three times the rate of small firms.

In October 2025 the government ruled out a text and data mining exception for model training, in December 2025 OpenAI and NEXTDC signed a memorandum for sovereign infrastructure in Sydney, and in April 2026 Microsoft announced its largest Australian investment.

Key Market Trends and Insights

• Uneven business adoption: The Australian Bureau of Statistics reported in June 2026 that around 12% of businesses use AI, rising to about 35% among large businesses.
• Compute built onshore: Microsoft committed AU$25 billion through 2029 in April 2026, and Amazon Web Services announced AU$20 billion for 2025 to 2029 in June 2025.
• Frontier labs arrive: Anthropic signed a memorandum with the government in March 2026 and, in September 2026, a lease for a 2.16 gigawatt Queensland campus.
• Banks and creators scale: Canva reported in April 2026 that its AI products had been used more than 27 billion times, while Commonwealth Bank became a strategic OpenAI partner in August 2025.

Australia Generative AI Market Size and Forecast

The market is shifting from experimentation with chat tools towards embedded copilots, coding assistants and autonomous agents tied to core business systems. Applications and copilots lead in value because software vendors package models into familiar products, while foundation models and application programming interfaces advance fastest as banks, agencies and developers build their own tools. Text and conversational use cases remain the largest by volume, and code generation grows quickest. Financial services leads industry demand, and government and public sector use accelerates under the National AI Plan. New South Wales remains the largest region, while Victoria grows quickest. Sovereign compute, copyright settings and trust requirements point to a durable build-out rather than a short-lived spending burst, even as smaller firms trail the leaders.

Key Takeaways: Australia Generative AI Market

Policy and Infrastructure Set the Foundation

Revenue is on course to grow about 16 times across the decade, from AUD 2.28 billion in 2025 to AUD 36.56 billion in 2035 at a 32.0% CAGR. The National AI Plan of December 2025 and AU$29.9 million for an AI Safety Institute give buyers a clearer rulebook.

Models, Code and Public Services Lead Growth

Applications and Copilots hold the largest share, but Foundation Models and APIs grow at an estimated 36.2% CAGR and Code Generation at an estimated 35.4% through 2035. Government and Public Sector use rises at an estimated 34.1% as agencies adopt the GovAI platform.

Hyperscale Commitments Anchor Local Capacity

Global providers are tying new capacity to Australian demand, which supports data residency, lower latency and sovereign workloads for banks and agencies.

• Amazon announced AU$20 billion for 2025 to 2029 in June 2025
• OpenAI and NEXTDC signed a Sydney infrastructure memorandum in December 2025
• Microsoft pledged AU$25 billion through 2029 in April 2026

Australia Generative AI Market Report Summary

Key Insight

Demand is shifting from experiments to embedded copilots, coding tools and agents, led by banks and technology firms. New South Wales leads, while Victoria grows fastest.

Key Trends in the Australia Generative AI Market

The Australia generative AI market is being reshaped by sovereign compute commitments, frontier laboratories opening local operations, copyright settings and agent-led enterprise software.

September 2026 - Anthropic Signs Lease at Queensland's Western Downs Digital Park

• On 16 September 2026 Queensland's Premier announced Anthropic as tenant of a AU$31.9 billion campus 250 km west of Brisbane.
• The site has a designated peak capacity of 2.16 gigawatts and is scheduled to come online next year, subject to approvals.
• Local inference capacity could ease data residency concerns for banks and agencies using Claude.

June 2026 - Salesforce Expands Melbourne Offices as Agentic AI Demand Rises

• Salesforce opened two extra floors at 55 Collins Street at its Agentforce World Tour in Melbourne on 17 June 2026.
• It reported that 76% of Australian service leaders are prioritising customer-facing AI spending, ahead of the global average.
• Customer service agents are an early commercial use for generative AI, which supports application revenue.

March 2026 - Anthropic Signs Memorandum with the Australian Government

• On 31 March 2026 Anthropic and the government agreed to cooperate on AI safety research under the National AI Plan.
• Anthropic offered AU$3 million in Claude credits to four research institutions, including Australian National University and Curtin University.
• It will share Economic Index data covering natural resources, agriculture, healthcare and financial services with the government.

October 2025 - Government Rules Out Text and Data Mining Exception for AI Training

• On 26 October 2025 the Attorney-General said the government has no plans to weaken copyright protections for AI.
• A Copyright and AI Reference Group is now examining licensing, certainty over AI-generated material and lower-cost enforcement.
• Model developers must therefore license local content, which may favour providers with partnerships over scrapers.

Key Insight

Sovereign compute, frontier laboratories setting up locally and a creator-first copyright stance are the main structural forces, while power and approvals remain the main risk to delivery timelines.

Recent Market Developments in the Australia Generative AI Market

Recent developments, presented from the most recent, show application launches, large infrastructure pledges, a national plan and strategic banking partnerships.

April 2026 - Microsoft Commits AU$25 Billion to Australian Cloud and AI Capacity

• On 23 April 2026 Microsoft announced its largest Australian investment, running through the end of 2029.
• It expects to expand its local cloud footprint by more than 140% and add Azure AI supercomputing capacity.
• Microsoft will also work with the AI Safety Institute on testing advanced systems.

April 2026 - Canva Brings Design into Claude and Launches Canva AI 2.0

• Canva unveiled Canva AI 2.0 on 16 April 2026 and, the next day, joined Anthropic's Claude Design.
• Canva said its AI products had been used more than 27 billion times, from a base of over a quarter billion monthly users.
• Embedding a Sydney-built design tool inside a frontier model shows how local software firms distribute generative features.

December 2025 - OpenAI and NEXTDC Sign Memorandum for Sovereign AI Infrastructure in Sydney

• On 5 December 2025 NEXTDC named OpenAI an infrastructure partner for its planned S7 campus at Eastern Creek.
• The first phase is expected in the second half of 2027, subject to approvals, with closed-loop cooling that avoids potable water.
• OpenAI already works with Commonwealth Bank, Canva, Atlassian, Coles and Virgin Australia.

December 2025 - Government Releases the National AI Plan

• The plan, released on 2 December 2025, promises AU$29.9 million for an AI Safety Institute to start in 2026.
• It backs data centre investment, the secure GovAI platform and generative AI pilots in schools.
• Clear guardrails and public sector demand reduce uncertainty for vendors planning multi-year Australian investments.

Key Insight

Sovereign infrastructure agreements, a national plan and design-software partnerships with frontier models show suppliers positioning for enterprise and public sector contracts through the forecast period.

Australia Generative AI Industry Segmentation

The Expert Market Research’s report on the Australia Generative AI Market offers a detailed analysis of the market based on the following segments.

Market Breakup by Component

• Applications and Copilots
• Foundation Models and APIs
• Infrastructure and Platforms
• Professional Services
• Others

Applications and Copilots lead on value, in our estimate, as vendors such as Microsoft, Salesforce and Atlassian embed models in familiar products; Salesforce reported on 17 June 2026 that 76% of Australian service leaders prioritise customer-facing AI. Foundation Models and APIs grow fastest at an estimated 36.2% CAGR through 2035, shown by Commonwealth Bank's August 2025 OpenAI partnership and Anthropic's AU$3 million credit programme of March 2026. Infrastructure and Platforms follow, supported by Amazon's AU$20 billion pledge of June 2025. Professional Services cover integration, change management and training, and grow with the pace of enterprise deployment.

Market Breakup by Modality

• Text and Conversational
• Code Generation
• Image and Video
• Audio and Others
• Others

Text and Conversational use leads, in our estimate, through chat assistants, enterprise search and customer service, including the banking and fraud use cases that Commonwealth Bank and OpenAI agreed to explore in August 2025. Code Generation grows fastest at an estimated 35.4% CAGR through 2035, as developers adopt agentic coding tools supplied by Anthropic and others. Image and Video is anchored by Canva, which reported in April 2026 that its AI products had been used more than 27 billion times. Audio and Others cover speech, voice agents and multimodal tools, and grow steadily from a small base.

Market Breakup by End-Use Industry

• Banking, Financial Services and Insurance
• Government and Public Sector
• Healthcare and Life Sciences
• Technology, Media and Telecommunications
• Retail and Others
• Others

Banking, Financial Services and Insurance leads, in our estimate, as the Australian Bureau of Statistics reported in June 2026 that AI use in the sector had risen 24 times from a very low base to about 24% of firms. Government and Public Sector grows fastest at an estimated 34.1% CAGR through 2035, supported by the National AI Plan of December 2025 and the GovAI platform. Healthcare and Life Sciences gain from imaging tools; Harrison.ai said in September 2026 that its products reach half of Australian radiologists. Technology, Media and Telecommunications has the highest adoption at about 38%. Retail and Others cover shops, mining, agriculture and education.

Market Breakup by Region

• New South Wales
• Victoria
• Queensland
• Western Australia
• Others (Rest of Australia)

New South Wales dominates, in our estimate, as Sydney hosts Canva, Atlassian, Anthropic's new office and NEXTDC's planned Eastern Creek campus for OpenAI, and it grows at an estimated 31.2% CAGR from a large base. Victoria is the fastest-growing region at an estimated 33.5%, helped by Melbourne cloud capacity and Salesforce's June 2026 office expansion. Queensland grows at 32.6%, with Anthropic's September 2026 lease at Western Downs. Western Australia grows at 31.8% on mining and energy demand. Rest of Australia, covering the other states and territories including Canberra's federal agencies, grows at 30.9%.

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If you choose to purchase the full report at a later stage, the amount already paid will be adjusted, and you will only need to pay the remaining balance.

Competitive Landscape in the Australia Generative AI Market

Competition combines global cloud providers, frontier model laboratories, enterprise software vendors and Australian technology firms. Entry barriers include access to compute, local data residency, trust and safety credentials, enterprise distribution and relationships with banks, agencies and developers.

Microsoft

Microsoft, headquartered in Redmond, Washington, sells Microsoft 365 Copilot, GitHub Copilot and Azure AI services to Australian enterprises and agencies. On 23 April 2026 it announced its largest Australian investment, AU$25 billion through 2029, to expand its local cloud footprint by more than 140% and add Azure AI supercomputing. It will also work with the Australian AI Safety Institute on testing advanced systems.

Amazon Web Services

Amazon Web Services, headquartered in Seattle, Washington, offers Amazon Bedrock and generative AI tooling from its Sydney and Melbourne infrastructure. In June 2025 Amazon announced AU$20 billion of investment for 2025 to 2029 in Australian data centres, plus three new solar farms in Victoria and Queensland. The programme followed AWS AI Spring Australia, including a Generative AI Accelerator and AI Launchpad.

OpenAI

OpenAI, headquartered in San Francisco, California, supplies ChatGPT Enterprise and model interfaces to Australian organisations. In August 2025 Commonwealth Bank became its strategic banking partner, and in December 2025 NEXTDC agreed to be an infrastructure partner for a sovereign AI campus in Sydney. Its Australian customers include Canva, Atlassian, Virgin Australia, Coles, UNSW and La Trobe University.

Canva

Canva, headquartered in Sydney, offers an AI-enabled design platform with generative image, document and video tools used by more than a quarter billion people monthly. It unveiled Canva AI 2.0 on 16 April 2026 and, the next day, announced its integration into Anthropic's Claude Design. Canva said its AI products and foundation models had been used more than 27 billion times.

Other players operating in the Australia generative AI market include Google, Anthropic, Atlassian, Salesforce, and Harrison.ai, alongside cloud resellers, systems integrators, specialist start-ups and open-source communities supplying models, tools and services to banks, agencies, retailers and developers across Australia.

Key Insight

Competition rests on compute access, local data residency, enterprise distribution and trust credentials rather than model quality alone, while new partnerships continue to reshape positions.