Gen AI Spending Soars: What’s Next?
- Sarah Ruivivar
- Apr 9
- 2 min read
Gartner's latest report is here to shake up your spreadsheets and strategic plans.
By 2025, global spending on generative AI is set to skyrocket to a whopping $644 billion. That's a 76.4% leap from 2024, folks! But what does this mean for enterprise IT leaders? Let's dive in.
First up, hardware is stealing the show, claiming a staggering 80% of gen AI spending. Devices alone will account for 398.3billion,with servers not far behind at180.6 billion. Software and services, while growing, are taking a backseat. According to Gartner's John Lovelock, the market is driven more by supply than demand, with AI-enabled devices becoming the norm by 2027.
This hardware-heavy trend means enterprises need to rethink their tech budgets. The shift towards embedded AI functionality in software suggests that standalone AI projects might become relics of the past. Instead, AI will increasingly come as part of existing software packages, making strategic planning and governance more crucial than ever.
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But it's not all smooth sailing. Gartner highlights the "PoC graveyard," where many internal AI projects have floundered. The culprits? Poor data quality, resistance to change, and lackluster ROI. Enterprises with more AI experience fared better, but many still struggled with these hurdles.
So, what's the game plan? Pivoting from custom solutions to commercial off-the-shelf options seems wise. These solutions promise more predictable outcomes and business value, aligning with Lovelock’s insights on reducing self-development efforts.
As gen AI spending surges, success will hinge on aligning investments with organizational readiness and overcoming key challenges. Enterprises that embrace this evolutionary approach will be well-positioned to harness the full potential of AI's transformative power. Ready, set, innovate!
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