Gartner Inc (IT, Financial) has released a forecast indicating that worldwide spending on generative AI (GenAI) is expected to reach $644 billion by 2025, marking a 76.4% increase from 2024. Despite initial challenges with proof-of-concept projects, foundational model providers are investing heavily to improve GenAI models. The report highlights a shift towards commercial off-the-shelf solutions for more predictable outcomes, with significant growth anticipated across all core markets and submarkets. The press release was issued on March 2025.
Positive Aspects
- Projected GenAI spending growth of 76.4% from 2024 to 2025.
- Significant investment by foundational model providers to enhance GenAI models.
- AI-enabled devices expected to drive GenAI spending, comprising 80% of the market.
Negative Aspects
- High failure rates in initial proof-of-concept work leading to declining expectations.
- Consumer disinterest in AI features, despite their integration into devices.
- Potential reduction in self-development efforts by CIOs due to focus on existing software solutions.
Financial Analyst Perspective
From a financial standpoint, Gartner Inc's forecast suggests a robust growth trajectory for the GenAI market, driven by substantial investments in AI technologies. The anticipated increase in spending reflects a broader trend of integrating AI capabilities into business operations and consumer products. However, the high failure rates in initial projects could pose risks to achieving these growth targets. Investors should monitor how foundational model providers address these challenges to capitalize on the market's potential.
Market Research Analyst Perspective
As a market research analyst, the forecast by Gartner Inc highlights a transformative period for the GenAI market. The integration of AI into consumer devices is a key driver, suggesting a shift in consumer technology trends. However, the lack of consumer demand for AI features indicates a potential disconnect between technology advancements and market needs. Companies should focus on aligning product offerings with consumer expectations to fully leverage the growth opportunities in the GenAI market.
Frequently Asked Questions
Q: What is the expected growth rate for GenAI spending from 2024 to 2025?
A: The expected growth rate is 76.4%.
Q: What percentage of GenAI spending is expected to go towards hardware?
A: 80% of GenAI spending is expected to go towards hardware.
Q: What challenges are associated with GenAI projects according to the forecast?
A: High failure rates in initial proof-of-concept work and consumer disinterest in AI features are noted challenges.
Read the original press release here.
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