Gartner predicts AI spending will reach $644 billion by 2025

Spending on generative artificial intelligence (GenAI) will grow to unprecedented levels in 2025, even though few organizations understand how the technology can help their business or bottom line, according to a recent Gartner analyst report. Experts believe this market “paradox” trend will continue through 2025 and 2026.

Global spending on GenAI will reach approximately $644 billion in 2025, up 76.4% from 2024. This spending trend occurs despite the technology’s lack of practical use and error rates. John-David Lovelock, vice president analyst at Gartner, said that despite growing concerns about the technology, foundational model providers are still investing billions of dollars to develop and enhance their solutions.

Lovelock said that this year, ambitious internal projects will face greater scrutiny. CIOs will likely choose commercial off-the-shelf solutions, while proof-of-concept experiments and homegrown implementations should be the exception. GenAI's prospects have been less ambitious recently, but the technology will still have a significant impact on all IT spending this year.

Experts predict that AI technology will become an integral part of all kinds of business operations and consumer products. This forced integration is largely due to AI capabilities being embedded directly into consumer hardware, with servers, smartphones, and PCs absorbing 80% of the projected GenAI spending.

Lovelock noted that the increasing popularity of AI-enabled devices is driving market growth, with these consumer electronics expected to account for almost the entire market by 2028. However, end consumers don’t seem to be that enthusiastic about GenAI, as they don’t actively seek these “extra” features when purchasing new devices. Regardless, manufacturers continue to embed AI as standard in mass-market products, ultimately forcing consumers to adopt it.

Developers adopted a service model that said, "Even if you don't want our product, you'll use it." This sounds like Microsoft's strategy back in the day.