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Gartner Forecasts Worldwide GenAI Spending to Reach $644 Billion in 2025

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CIOs Must Prepare for Rising GenAI Spending in 2025, Fueled by Better Foundational Models and Growing Demand for AI Products

Worldwide 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, Inc.

"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)

AI Capable Consumer Devices to Drive GenAI Spending

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."

Gartner's GenAI spending forecast methodology relies heavily on rigorous analysis of the sales by over a thousand vendors across the entire range of GenAI products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.

The Gartner GenAI spending forecast delivers a unique perspective on GenAI spending across the hardware, software and IT services segments. These reports help Gartner clients understand market opportunities and challenges. The most recent GenAI spending forecast research is available to Gartner clients in "Forecast Alert: GenAI IT Spending, 2023-2028, Worldwide."

Additional leadership trends will be presented during Gartner IT Symposium/Xpo, the world's most important conference for CIOs and other IT executives. Gartner analysts and attendees will explore the technology, insights and trends shaping the future of IT and business, including AI, business transformation, cybersecurity, customer experience, data analytics, executive leadership and more. Follow news and updates from the conferences on X using #GartnerSYM, and on the Gartner Newsroom.

Upcoming dates and locations for Gartner IT Symposium/Xpo include:

September 8-10, 2025 | Gold Coast, Australia

October 20-23, 2025 | Orlando, FL

October 28-30, 2025 | Tokyo, Japan

November 10-13, 2025 | Barcelona, Spain

November 17-19, 2025 | Kochi, India

About Gartner for High Tech

Gartner for High Tech equips tech leaders and their teams with role-based best practices, industry insights and strategic views into emerging trends and market changes to achieve their mission-critical priorities and build the successful organizations of tomorrow. Additional information is available at www.gartner.com/en/industries/high-tech.

Follow news and updates from Gartner for High Tech on X and LinkedIn using #GartnerHT.

About Gartner

Gartner, Inc. (NYSE:IT) delivers actionable, objective insight to executives and their teams. Our expert guidance and tools enable faster, smarter decisions and stronger performance on an organization's mission-critical priorities. To learn more, visit gartner.com.

Matt LoDolce

Gartner

matt.lodolce@gartner.com

Meghan Moran

Gartner

meghan.moran@gartner.com

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