AI spend set to soar despite mixed results from adoption

The jury might still be out over just how effective AI has been for businesses but there is still plenty of money swishing about, with spend expected to reach $644 billion (£500bn) this year, up from $400bn (£310bn) in 2024.

That is according to a new forecast from Gartner, which predicts AI spend will see a major surge across all core markets, including software, devices, and services.

Gartner distinguished VP analyst John-David Lovelock said that while expectations for GenAI’s capabilities are declining due to high failure rates in initial proof-of-concept work and dissatisfaction with current GenAI results, foundational model providers are investing billions to enhance GenAI models’ size, performance, and reliability.

Lovelock explained: “Ambitious internal projects from 2024 will face scrutiny this year, as CIOs opt for commercial off-the-shelf solutions for more predictable implementation and business value

“Despite model improvements, CIOs will reduce POC and self-development efforts, focusing instead on GenAI features from existing software providers.”

In terms of specific numbers, GenAI spending across devices this year is expected to see a nearly 100% growth over 2024, with spend to increase to nearly $400bn (£310bn), equating to a significant portion of overall predicted spend for GenAI in 2025.

Meanwhile, GenAI spending related to servers is predicted to increase by 33% this year, with 2025’s spend forecast to be $180bn (£140bn).

When it comes to GenAI spend concerning software, it is forecast to see a 94% growth, according to Gartner, and a spend of $37bn (£29bn~).

As for GenAI spending across services, it is predicted to be $27.7bn (£21bn), representing an increase of over 160% over 2024.

Lovelock added: “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.

“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.”

Earlier this month, a study from Behave and Mediaplus UK revealed that while advertising and marketing bosses talk a good game about the implementation of AI tools, those at the coalface are increasingly concerned about job security and feeling unheard in the workplace. Not only is this leaving the technology at risk of being fragmented, the growing disconnect poses a serious risk to successful AI integration in the UK.