Gartner Predicts Global Generative AI Spending to Hit $644 Billion in 2025
Worldwide generative AI (GenAI) spending is projected to soar to $644 billion in 2025, marking a 76.4% increase from 2024, according to a forecast by Gartner, Inc.
Despite declining expectations due to high failure rates in initial proof-of-concept (POC) projects, foundational model providers continue to invest heavily in improving GenAI’s size, performance, and reliability. This dynamic is expected to shape the AI landscape through 2025 and 2026.
Strategic Shift: CIOs Prioritize Off-the-Shelf GenAI Solutions
According to John-David Lovelock, Distinguished VP Analyst at Gartner, CIOs are re-evaluating their AI strategies:
"Ambitious internal projects from 2024 will face scrutiny in 2025. CIOs will prioritize commercial off-the-shelf solutions for more predictable implementation and business value. While models continue to improve, businesses will scale back on POC and self-development efforts, opting instead for GenAI features integrated into existing software."
GenAI Spending Breakdown for 2025
Gartner forecasts substantial growth across all core GenAI markets, particularly in devices and software (see Table 1).
Table 1. Global GenAI Spending Forecast (in Million,s USD)
| Market Segment | 2024 Spending | 2024 Growth (%) | 2025 Spending | 2025 Growth (%) |
|---|---|---|---|---|
| Services | $10,569M | 177.0% | $27,760M | 162.6% |
| Software | $19,164M | 255.1% | $37,157M | 93.9% |
| Devices | $199,595M | 845.5% | $398,323M | 99.5% |
| Servers | $135,636M | 154.7% | $180,620M | 33.1% |
| Overall GenAI | $364,964M | 336.7% | $643,860M | 76.4% |
AI-Enabled Devices to Drive Market Growth
Hardware spending is expected to dominate GenAI investments, with 80% of total GenAI spending going toward AI-integrated servers, smartphones, and PCs.
Lovelock emphasized the shift in consumer behavior:
"The AI-enabled device market will soon become the norm. By 2028, nearly all consumer devices will be AI-integrated. However, consumers are not necessarily demanding AI features—rather, manufacturers are embedding AI as a standard feature, making it an unavoidable purchase."
Gartner’s Research Methodology
Gartner’s GenAI spending forecast is based on extensive primary and secondary research, tracking over 1,000 vendors across hardware, software, and IT services.
Gartner clients can access detailed insights in the latest report: "Forecast Alert: GenAI IT Spending, 2023-2028, Worldwide."
