Global GenAI spending to reach $644B in 2025: Gartner

Spending on generative AI (GenAI) is expected to total $644 billion in 2025, a 76.4% jump from 2024, reveals a forecast by Gartner.

“Expectations for GenAI's capabilities are declining due to high failure rates in initial proof-of-concept work and dissatisfaction with current GenAI results,” said John-David Lovelock, 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,” he added. 

The surge in spending highlights GenAI’s growing impact across the IT markets, as businesses embed AI into core operations and consumer-facing technologies.

The Gartner report reveals the most significant jump in device-related GenAI spending, which is projected to nearly double from $199.6 billion in 2024 to $398.3 billion in 2025—a 99.5% increase.

Spending on GenAI software is set to rise from $19.2 billion in 2024 to $37.2 billion in 2025, reflecting a growth rate of 94%. Services spending will also see strong growth, increasing by 162% to $27.8 billion in 2025, up from $10.6 billion the previous year.

“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.

The report projects that the bulk of GenAI spending, nearly 80%, will go towards hardware, including servers, smartphones, and PCs, as AI capabilities become a core feature of next-gen devices. 

“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,” said Lovelock.