Gartner: GenAI spending expected to soar this year to $644B
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Gartner is headquartered at 56 Top Gallant Road in Stamford.
Global spending on generative artificial intelligence, also known as GenAI, is forecasted to skyrocket in 2025 despite dissatisfaction with current outcomes, according to Gartner.
GenAI is a type of AI that uses models to create new content like text, images, music and videos, by learning from existing data and generating new data based on the input.
The Stamford-based IT research firm predicts worldwide investment in Gen AI will increase 76.4% from 2024 to $644 billion by the end of this year.
“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, vice president 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.”
He said “ambitious internal projects from 2024 will face scrutiny in 2025” as chief information officers choose commercial off-the-shelf solutions for more predictable implementation and business value.
Gartner expects services-related GenAI spending to grow the fastest by 163% to $27.8 billion this year. It foresees the highest investment in device-focused GenAI, expecting it to jump 99.5% to $398 billion in 2025.
GenAI spending will be driven largely by AI integration into hardware, such as servers, smartphones and PCs, with 80% of GenAI spending going toward 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,” Lovelock said. “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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