Global GenAI spending to hit $644bn in 2025, says report
ABU DHABI, 20 hours, 31 minutes ago
Worldwide generative AI (GenAI) spending is expected to hit $644 billion in 2025, thus recording a 76.4% increase from 2024, according to a report by Gartner.
"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," remarked 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 stated.
According to him, GenAI spending is poised for significant growth across all core markets and submarkets in 2025.
It will have a transformative impact across all aspects of IT spending markets, suggesting a future where AI technologies become increasingly integral to business operations and consumer products.
"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," remarked Lovelock.
"Despite model improvements, CIOs will reduce POC and self-development efforts, focusing instead on GenAI features from existing software providers," he added.
According to Lovelock, this spend will be driven largely by the integration of AI capabilities into hardware, such as servers, smartphones and PCs, with 80% of GenAI spending going towards 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," he noted.
"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," he added.-TradeArabia News Service
