Worldwide Generative AI Investment Projected to Reach $644 Billion by 2025: Gartner

Synopsis

A recent report indicates that global generative AI (GenAI) spending is expected to soar to $644 billion by 2025, driven by hardware integration and significant investments by foundational model providers, despite decreasing expectations of GenAI capabilities.

Key Takeaways

Global GenAI spending estimated at $644 billion by 2025.
76.4% increase from 2024.
80% of spending on hardware integration.
Declining expectations for GenAI capabilities.
Foundation model providers investing billions annually.

New Delhi, April 1 (NationPress) Global generative AI (GenAI) expenditure is projected to achieve $644 billion by 2025, marking an increase of 76.4 percent from 2024, according to a recent report released on Tuesday.

As per Gartner's forecast, the surge in GenAI spending in 2025 will primarily stem from the incorporation of AI capabilities into hardware platforms, including servers, smartphones, and PCs, with 80 percent of this spending directed towards hardware.

“Anticipations regarding GenAI's functionalities are waning due to high failure rates in initial proof-of-concept (POC) projects and dissatisfaction with existing GenAI outcomes,” highlighted John-David Lovelock, Distinguished VP Analyst at Gartner.

“Nonetheless, foundational model providers are investing billions annually to improve the size, performance, and reliability of GenAI models. This contradiction is expected to continue through 2025 and 2026,” he added.

GenAI expenditure is set for remarkable growth across all primary and subsidiary markets in 2025.

GenAI is anticipated to have a groundbreaking effect on all facets of IT spending markets, indicating a future where AI technologies become vital to business operations and consumer goods.

“The market’s growth pattern is significantly affected by the rising number of AI-enabled devices, which are projected to dominate the consumer device market by 2028,” stated Lovelock. “However, consumers are not actively pursuing these features. As manufacturers incorporate AI as a standard component in consumer products, consumers will have no choice but to acquire them.”

Ambitious internal projects from 2024 will undergo scrutiny in 2025, as CIOs prefer commercial off-the-shelf solutions for more predictable implementation and business benefits.

“Despite advancements in models, CIOs will scale back on POC and self-development initiatives, concentrating instead on GenAI features from existing software vendors,” remarked Lovelock.

Gartner noted that its GenAI spending forecast methodology is grounded in meticulous analysis of sales from over a thousand vendors across the entire spectrum of GenAI products and services.