Global AI Spending to Hit $644 Billion by 2025

By 2025, global spending on General Artificial Intelligence (genAI) is projected to reach an impressive $644 billion, signaling a major leap in technology investment.

Explosive Investment in Generative AI

Research firm Gartner predicts that global spending on generative artificial intelligence (genAI) will reach $644 billion by 2025. This massive investment signifies a surge in the adoption of technologies powered by genAI across various industrial sectors.

Rapid Growth Fueled by Diverse Sectors

This forecast represents a remarkable 76% increase in genAI spending from 2024. Gartner attributes this exponential growth to the expanding application of genAI in multiple sectors. The technology is expected to be deeply integrated into consumer products and business operations.

The breakdown of genAI spending for 2025 is as follows:

Hardware is expected to account for 80% of total expenditures, with AI capabilities being integrated into devices such as servers, smartphones, and PCs.
Software spending is set to nearly double, rising from $19.2 billion in 2024 to $37.2 billion in 2025.

Increasingly Intelligent Consumer Devices

John-David Lovelock, VP analyst at Gartner, noted that AI-equipped devices are expected to “dominate the consumer device market by 2028.” However, he emphasized that it is not consumer demand driving this shift. Instead, manufacturers are increasingly making AI a default feature in their devices, which will “force consumers to purchase them.”

Moderating Expectations for genAI

Despite these optimistic investment forecasts for genAI, expectations for the technology’s capabilities are expected to cool down. Lovelock highlighted that high failure rates in early proof-of-concept projects and disappointing outcomes generated by AI have led to reduced confidence in its immediate impact.

However, providers of foundational models continue to invest billions annually to enhance the size, performance, and reliability of genAI models. “This paradox will persist at least until 2025 and 2026,” he added.