GenAI demand to hit $644bn this year

8th April 2025
Stuart O'Brien

Global generative AI (GenAI) spending is expected to total $644 billion in 2025, an increase of 76.4% from 2024, according to a forecast by Gartner.“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 John-David Lovelock, Distinguished VP Analyst at Gartner. “Despite this, foundational model providers are investing billions annually to enhance GenAI models’ size, performance, and reliability. This paradox will persist through 2025 and 2026.

“Ambitious internal projects from 2024 will face scrutiny in 2025, as CIOs opt for commercial off-the-shelf solutions for more predictable implementation and business value. Despite model improvements, CIOs will reduce POC and self-development efforts, focusing instead on GenAI features from existing software providers.” said Lovelock.

GenAI spending is poised for significant growth across all core markets and submarkets in 2025 (see Table 1). GenAI will have a transformative impact across all aspects of IT spending markets, suggesting a future where AI technologies become increasingly integral to business operations and consumer products.

Table 1. Worldwide GenAI Spending Forecast (Millions of U.S. Dollars)

	2024 Spending	2024 Growth (%)	2025 Spending	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)

GenAI spending in 2025 will be driven largely by the integration of AI capabilities into hardware, such as servers, smartphones and PCs, with 80% of GenAI spending going towards hardware.“The market’s growth trajectory is heavily influenced by the increasing prevalence of AI-enabled devices, which are expected to comprise almost the entire consumer device market by 2028,” said Lovelock. “However, consumers are not chasing these features. As the manufacturers embed AI as a standard feature in consumer devices, consumers will be forced to purchase them.”

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