According to a recent Gartner report, global spending on generative AI is projected to reach $644 billion by 2025, a 76.4% increase from 2024. This significant growth has garnered considerable attention, with various analytics firms noting the rising adoption and expenditure on generative AI by businesses.
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The report highlights that hardware will dominate generative AI spending in 2025, accounting for an estimated 80%. Specifically, device spending is projected to reach $398.3 billion (a 99.5% increase); server spending, $180.6 billion (a 33.1% increase); software spending, a comparatively smaller $37.2 billion (still a 93.9% increase); and services spending, $27.8 billion (a massive 162.6% increase).
Gartner analyst John Lovelock explains that the explosive growth in the device market is primarily supply-driven, not demand-driven. While consumers and businesses aren't urgently seeking AI devices, manufacturers are actively launching related products. He predicts that by 2027, nearly all personal computers will be AI-powered.
Although hardware currently leads generative AI spending, Lovelock notes this proportion may increase further as the market evolves. Generative AI capabilities will increasingly be embedded within existing software, requiring businesses to reassess their technology budgets and infrastructure planning.
However, the Gartner report also points out that many internal generative AI projects within businesses have fallen short of expectations. Three primary reasons are cited: inadequate data quality, employee difficulties in using the new technology, and insufficient return on investment. These challenges highlight that the obstacles to successful generative AI adoption are often related to internal organizational readiness, rather than inherent technological limitations.
In 2025, businesses are expected to shift from ambitious internal projects to more mature commercial solutions for more reliable implementation and returns. Technology leaders should prioritize vendor solutions that integrate generative AI capabilities into existing systems, rather than developing custom applications from scratch.
As generative AI spending accelerates towards $644 billion, success hinges not on the sheer volume of expenditure, but on aligning investment with organizational readiness, overcoming key failure factors, and maximizing the value of this rapidly evolving technology.
Key Takeaways:
🔍 Global generative AI spending is projected to reach $644 billion by 2025, a 76.4% increase.
💻 Hardware spending will account for 80%, with the device market being the primary driver.
🚀 Businesses will shift from internal projects to mature commercial solutions to ensure ROI.
