Global GenAI Spending Set to Surge to $644 Billion in 2025, Driven by Advancements and AI-Enabled Devices
The adoption of generative artificial intelligence (GenAI) is accelerating at an unprecedented pace, with worldwide spending on GenAI technologies projected to reach $644 billion in 2025, a staggering 76.4% increase from 2024, according to a forecast by Gartner, Inc. This rapid growth underscores the transformative impact of GenAI across industries, as businesses and consumers alike embrace AI-driven solutions. However, this surge in investment comes with challenges, including high failure rates in early proof-of-concept (POC) projects and growing scrutiny over internal AI initiatives.
The Paradox of Rising Expectations and High Failure Rates
Despite the enthusiasm surrounding GenAI, John-David Lovelock, Distinguished VP Analyst at Gartner, highlights a paradox in the market. “Expectations for GenAI’s capabilities are declining due to high failure rates in initial proof-of-concept (POC) work and dissatisfaction with current GenAI results,” said Lovelock. Yet, foundational model providers continue to invest billions annually to enhance the size, performance, and reliability of GenAI models.
This tension between unmet expectations and ongoing innovation will persist through 2025 and 2026. As a result, many CIOs are shifting their focus away from ambitious internal projects and toward commercial off-the-shelf solutions, which offer more predictable implementation timelines and measurable business value. According to Lovelock, “Ambitious internal projects from 2024 will face scrutiny in 2025, as CIOs opt for commercial solutions over self-development efforts.”
GenAI Spending Across Core Markets
The forecast reveals significant growth across all core markets and submarkets in 2025, with GenAI becoming increasingly integral to IT spending. Below is a breakdown of the projected spending:
| Category | 2024 Spending ($M) | 2024 Growth (%) | 2025 Spending ($M) | 2025 Growth (%) |
|---|---|---|---|---|
| Services | 10,569 | 177.0 | 27,760 | 162.6 |
| Software | 19,164 | 255.1 | 37,157 | 93.9 |
| Devices | 199,595 | 845.5 | 398,323 | 99.5 |
| Servers | 135,636 | 154.7 | 180,620 | 33.1 |
| Overall GenAI | 364,964 | 336.7 | 643,860 | 76.4 |
Source: Gartner (March 2025)
AI-Capable Consumer Devices Driving Growth
A significant driver of GenAI spending in 2025 will be the integration of AI capabilities into hardware, such as servers, smartphones, and PCs. Remarkably, 80% of GenAI spending is expected to go toward hardware, reflecting the growing prevalence of AI-enabled devices. By 2028, nearly all consumer devices are anticipated to include AI as a standard feature.
“The market’s growth trajectory is heavily influenced by the increasing prevalence of AI-enabled devices,” said Lovelock. “Consumers may not actively seek these features, but as manufacturers embed AI into devices, they will have no choice but to adopt them.” This trend highlights the role of hardware manufacturers in shaping the future of GenAI adoption.
Methodology Behind the Forecast
Gartner’s GenAI spending forecast is based on rigorous analysis of sales data from over 1,000 vendors across the entire spectrum of GenAI products and services. The methodology combines primary research techniques with secondary research sources to build a comprehensive database of market size data. This approach ensures the forecast provides a reliable and actionable perspective on GenAI spending trends.
Implications for Businesses and IT Leaders
For CIOs and IT leaders, the rapid rise in GenAI spending presents both opportunities and challenges. While advancements in AI technology offer immense potential for innovation and efficiency, the high failure rates of POC projects highlight the need for careful planning and execution. Organizations must balance the adoption of cutting-edge AI solutions with realistic expectations and measurable outcomes.
Lovelock advises CIOs to focus on leveraging GenAI features from existing software providers rather than pursuing costly and time-consuming self-development efforts. “By adopting commercial solutions, businesses can achieve more predictable implementation and faster returns on investment,” he said.
The Road Ahead: GenAI as a Business Essential
As GenAI continues to evolve, its influence on business operations and consumer products will only deepen. From enhancing customer experiences to optimizing supply chains, AI technologies are becoming indispensable tools for organizations seeking to stay competitive in a rapidly changing landscape.
The integration of AI into everyday devices further underscores the inevitability of GenAI adoption. Whether through smartphones, PCs, or servers, AI is set to become a ubiquitous part of daily life, driving demand and fueling further innovation.
Stay Ahead with Gartner Insights
For organizations looking to navigate the complexities of GenAI adoption, Gartner’s research offers invaluable guidance. The latest GenAI spending forecast is available to Gartner clients in the report “Forecast Alert: GenAI IT Spending, 2023-2028, Worldwide.”
Additionally, insights into leadership trends and emerging technologies will be shared at Gartner IT Symposium/Xpo, the premier conference for CIOs and IT executives. Attendees will explore topics such as AI, business transformation, cybersecurity, and data analytics, gaining actionable strategies to drive their organizations forward. Follow updates from the event on X using #GartnerSYM or visit the Gartner Newsroom for the latest news.
A Transformative Era for GenAI
The forecasted $644 billion in global GenAI spending for 2025 reflects the technology’s growing importance across industries. As businesses and consumers increasingly rely on AI-driven solutions, the role of GenAI in shaping the future of IT and business cannot be overstated. By preparing for this transformative era, organizations can harness the power of GenAI to unlock new opportunities, drive innovation, and achieve sustainable growth.
