Gartner, Inc. forecasts that worldwide generative AI (GenAI) spending will reach $644 billion in 2025, marking a 76.4% increase from 2024. This surge reflects the growing adoption of AI technologies across industries, despite lingering concerns about their effectiveness.
GenAI Market Faces Challenges but Continues to Expand
“Expectations for GenAI are declining as early proof-of-concept (POC) projects face high failure rates, leading to growing dissatisfaction with the results,” said John-David Lovelock, Distinguished VP Analyst at Gartner. “Despite this, foundational model providers are still investing billions each year to improve the size, performance, and reliability of GenAI models. This paradox is expected to continue through 2025 and 2026.”
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Lovelock further noted that many ambitious GenAI projects launched in 2024 will undergo scrutiny in 2025. As a result, CIOs will prioritize off-the-shelf solutions for predictable implementation and business value. While model improvements will continue, CIOs are expected to shift away from self-development efforts, instead leveraging GenAI features from existing software providers.
GenAI Investment to Drive IT Market Transformation
The GenAI market is set to expand significantly across all core segments in 2025 (see Table 1). AI technologies are becoming increasingly embedded in both business operations and consumer products, reshaping IT spending across industries.
Table 1. Global GenAI Spending Forecast (Millions of U.S. Dollars)
| Category | 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 |
| Total GenAI | 364,964 | 336.7 | 643,860 | 76.4 |
Source: Gartner (March 2025)
AI-Enabled Consumer Devices Will Fuel GenAI Growth
A significant portion of GenAI spending (80%) will go toward AI-integrated hardware, including servers, smartphones, and PCs. Lovelock highlighted the crucial role of AI-enabled devices in driving market expansion, noting that nearly the entire consumer device market will feature AI capabilities by 2028.
“Consumers aren’t actively seeking AI features,” Lovelock explained. “Instead, manufacturers are embedding AI as a standard, effectively making it a necessity rather than a choice.”
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Gartner’s Research Offers a Strategic GenAI Outlook
Gartner’s GenAI spending forecast is based on rigorous analysis of sales data from over a thousand vendors across the AI ecosystem. By leveraging primary and secondary research sources, Gartner provides a comprehensive market perspective that helps businesses navigate emerging opportunities and challenges.
FAQs
1. Why is GenAI spending growing so rapidly?
The rapid increase in GenAI adoption is driven by its integration into enterprise software, AI-powered consumer devices, and cloud-based solutions. Businesses see GenAI as a crucial tool for automation, innovation, and competitive advantage.
2. Which industries are investing the most in GenAI?
Industries such as healthcare, finance, retail, and technology are leading GenAI adoption, leveraging AI for improved efficiency, data processing, and customer engagement.
3. How will AI-enabled devices impact consumer choices?
By 2028, AI will be embedded in nearly all consumer devices. While customers may not actively seek AI features, manufacturers are making AI integration standard, influencing purchasing decisions indirectly.
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