Worldwide GenAI Spending to Reach $644 Billion in 2025
Preparing for Rising GenAI Spending in 2025, Fuelled by Better Foundational Models and Growing Demand for AI Products.
> John-David Lovelock, VP Analyst, Gartner
Spending on generative AI (GenAI) worldwide is projected to hit $644 billion in 2025, marking a 76.4% surge compared to 2024. Despite the growing investments, enthusiasm around GenAI's potential is beginning to cool. Early proof-of-concept (POC) trials have seen high failure rates, and many organizations are underwhelmed by current GenAI capabilities. Nonetheless, leading AI model developers continue pouring billions into expanding the size, speed, and dependability of GenAI systems—a contradiction expected to continue through 2025 and 2026.
Shift from Custom Projects to Ready-Made Solutions
Many large-scale internal GenAI projects initiated in 2024 will be reevaluated in 2025. CIOs are likely to shift focus towards ready-made, commercial GenAI tools that promise faster implementation and clearer ROI. Even as GenAI models improve, organizations will reduce their custom development and POC initiatives, favouring embedded GenAI features from trusted software vendors.
Hardware to Dominate GenAI Spending
A significant portion of GenAI-related spending in 2025 will be directed toward AI-integrated hardware, including servers, PCs, and smartphones. Gartner estimates that 80% of all GenAI investment next year will go toward these hardware components.
GenAI spending is expected to expand significantly across all key markets and submarkets by 2025.GenAI will have a disruptive impact on all elements of the IT expenditure sectors, pointing to a future in which AI technologies are more integrated into company processes and consumer products.
AI Features Becoming Standard in Consumer Devices
The rapid adoption of AI-enabled hardware is a key factor in market growth. By 2028, nearly all consumer devices are expected to include some form of AI capability. However, this shift isn’t being driven by consumer demand. Instead, manufacturers are embedding AI as a default feature, effectively making it a non-optional part of future device purchases.
How Gartner Builds Its Forecast
Gartner’s predictions are grounded in extensive research, drawing on sales data from over a thousand vendors offering GenAI products and services. The company employs a combination of in-depth primary research and reliable secondary sources to build a robust database, forming the basis of its GenAI spending outlook.
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