Gartner: 2025 IT Spending Will Not Go Toward Gen AIGartner: 2025 IT Spending Will Not Go Toward Gen AI

Contrary to other recent reports, upticks in IT spending won’t fund generative AI itself.

That’s the word from research firm Gartner, which released new stats on Tuesday laying out expectations for global IT spending in 2025. 

Yes, the numbers will rise — by 9.8% compared to last year, per Gartner, for a total of $5.61 trillion. However, the growth in IT budgets will accommodate price hikes rather than recurrent spending, analysts said. And, they added, the money will not be set aside solely for the latest technology craze: generative AI. 

“This means that, in 2025, nominal spending versus real IT spending will be skewed, with price hikes absorbing some or all of budget growth,” said John-David Lovelock, distinguished vice president analyst at Gartner. “All major categories are reflecting higher-than-expected prices, prompting CIOs to defer and scale back their true budget expectations.”

At the same time, while generative AI will influence budgets, IT spending will not go toward gen AI itself, Gartner asserted. 

“Gen AI is sliding toward the trough of disillusionment, which reflects CIOs’ declining expectations for gen AI, but not their spending on this technology," Lovelock said. “For instance, the new AI-ready PCs do not yet have ‘must have’ applications that utilize the hardware. While both consumers and enterprises will purchase AI-enabled PC, tablets and mobile phones, those purchases will not be overly influenced by the gen AI functionality.”

Related:How Channel Partners Can Help Enterprise Customers Get Better ROI from Gen AI Deployments

Gartner's John Lovelock

That tune sounds a bit different from the one Gartner was singing last October. That’s when Lovelock said global IT spending for 2025 would reach $5.74 trillion, a 9.3% jump, directly because of generative AI demand. 

However, while Lovelock said at the time that CIOs will pay for gen AI beyond proof-of-concept work this year, expectations for the technology still would drop.

“The reality of what can be accomplished with current gen AI models, and the state of CIOs’ data will not meet today’s lofty expectations,” Lovelock said a few months ago in a statement similar to the one released on Jan. 21.

Where Will IT Spending Go in 2025?

Meanwhile, even though segments including data center systems, devices and software will see double-digit growth in 2025, largely due to generative AI hardware upgrades, they will not yet differentiate themselves in terms of functionality, per Gartner.

In terms of specific growth projections, here’s what Gartner expects for 2025 IT spending:

Related:2025 AI Predictions: 9 Channel Insiders on What to Expect

Who Will Fuel 2025 IT Spending?

Most of the IT spending will come from IT services companies and the major cloud computing providers — the so-called hyperscalers, Gartner said. Together, these groups will account for more than 70% of the IT outlay in 2025. 

When it comes to the hyperscalers and AI, specifically, look for cloud providers to foot big bills for AI-optimized servers this year. That IT spending will reach $202 billion, easily double what the likes of Amazon Web Services, Microsoft Azure, Google Cloud, Oracle Cloud and others have paid for traditional servers, Gartner said. 

“By 2028, hyperscalers will operate $1 trillion worth of AI-optimized servers, but not within their traditional business model or IaaS market,” Lovelock said. “Hyperscalers are pivoting to be part of the oligopoly AI model market.” 

Gartner vs. Canalys, Wanclouds on 2025 AI Outlay

Gartner’s take on 2025 IT spending as it relates to generative AI diverges fairly significantly from other industry forecasts. For instance, Canalys (a Channel Futures sister company) in November said that this year’s predicted $5.44 trillion in IT spending will largely fund accelerated AI enablement, embedding and operations.

Related:Vultr, AMD, Broadcom, Juniper Team for ‘AI Innovation’

However, and perhaps similar to Gartner, Canalys said the recent surge in AI infrastructure growth will reduce somewhat, even as the hyperscalers ramp up server spending. 

Notable for channel partners is that Canalys sees big demand coming for IT services. That segment will see nearly 11% growth as organizations shift focus from operational efficiencies to long-term strategic challenges, which include how to embed AI across all business functions, per the analyst firm.

Also of interest is that managed service provider Wanclouds last week released a report indicating that enterprises are augmenting their IT spending to accommodate AI workloads — findings that go against Gartner’s.

“Our research shows that organizations are not only investing heavily in cloud resources to support their AI initiatives but are also leveraging AI to optimize their cloud infrastructure,” said Wanclouds CEO Faiz Khan.