Hedge funds and other large investment firms are increasingly reliant on unconventional data sources – everything from credit card transactions to satellite imagery – to gain an edge in the markets. Spending on this “alternative data” surged in 2025, reaching $2.8 billion, a 17% increase from the previous year, according to a new report from consultancy Neudata. This represents more than double the $1.4 billion spent on these datasets in 2021, highlighting a rapidly growing trend in the financial industry.
The appetite for alternative data isn’t showing signs of slowing down. Neudata projects that spending could reach over $23 billion by 2030 in a bullish scenario, or just under $8 billion in a more conservative outlook. The growth trajectory hinges on the influx of both new buyers and sellers into this evolving market, explained Daryl Smith, head of research at Neudata. “Plenty of funds have only stuck their toes in,” Smith noted, adding that “several hundred” new datasets were launched in the last year alone.
This increased demand is being fueled, in part, by advancements in artificial intelligence. AI is not only making it easier to process and analyze the vast amounts of alternative data available but is also opening up access to a wider range of investment firms that previously lacked the technical capabilities to extract meaningful insights. The ability to quickly structure and clean raw data, thanks to AI tools, is driving demand for direct connections to alternative data vendors’ feeds.
The Expanding Universe of Alternative Data
Traditionally, investment decisions were based on financial statements, economic indicators, and analyst reports. Alternative data offers a different perspective, providing real-time insights into consumer behavior, supply chain dynamics, and other factors that can influence market performance. Examples include geolocation data from mobile phones, social media sentiment analysis, and even weather patterns. The types of data sought after are shifting, with information technology and consumer discretionary data currently in high demand, reflecting broader macroeconomic uncertainties and the growing importance of AI.
However, the market isn’t without its challenges. Price negotiations, difficulties in converting trial datasets into long-term subscriptions, and concerns about data quality remain significant hurdles for potential buyers. Despite these obstacles, the overall trend points toward continued growth and innovation.
New Players and Data Sources
The landscape of alternative data providers is also evolving. While many new entrants are startups identifying unique data sources, established corporations are increasingly recognizing the value of their own data and entering the market. These companies, often having previously been targets of web-scraping, are now proactively monetizing their data assets. Neudata’s consulting team has recently received inquiries from several large companies exploring data sales, though specific names remain confidential.
Trustpilot, a consumer review website, serves as one example of a firm that has begun selling its data and presenting at Neudata conferences, according to Smith. Unsurprisingly, data sources focused on the growth of artificial intelligence are particularly sought after. Vendors like Aterio, which tracks data center construction and power usage, are gaining prominence.
Despite the emergence of specialized datasets, web-scraping remains the most popular type of alternative data, accounting for approximately 15% of total spending in 2025 – a figure consistent with 2024.
AI’s Role in Data Consumption
The integration of AI is fundamentally changing how investment firms consume and utilize alternative data. Beyond simply processing large datasets, AI is being used to identify patterns, predict future trends, and automate trading strategies. This allows fund managers to react more quickly to market changes and make more informed investment decisions. The increasing sophistication of AI algorithms is also driving demand for higher-quality, more granular data.
As the alternative data market matures, the focus is shifting from simply acquiring data to effectively integrating it into existing investment workflows. Firms are looking for solutions that can seamlessly connect to various data sources, automate data cleaning and processing, and provide actionable insights.
The continued growth of the alternative data market is likely to reshape the investment landscape in the years to come. As more firms embrace these unconventional data sources and leverage the power of AI, the competition for alpha – the excess return above a benchmark – will only intensify.
Looking ahead, the industry will be closely watching the pace of new entrants, both on the buy and sell sides, as well as the continued development of AI-powered data analytics tools. The next major update from Neudata is expected in the first quarter of 2026, providing a more detailed analysis of market trends and future projections.
What are your thoughts on the growing use of alternative data in investment strategies? Share your comments below and let us realize how you see this trend evolving.
