IT spending growth in 2025 comes as CIOs move from proof-of-concept, and begin investment into generative AI next year

Gartner has predicted a healthy growth in IT spending worldwide next year, and noted that CIOs in 2025 will spend more money on generative AI (GenAI).

But Gartner in its worldwide IT spending forecast, also warned that while more money will be spent on GenAI, “the reality of what can be accomplished with current GenAI models, and the state of CIO’s data will not meet today’s lofty expectations.”

It comes after Gartner had in the summer had predicted that worldwide IT spending would reach $5.26 trillion in 2024, marking a 7.5 percent increase from 2023. This was a slight decrease from the 8 percent predicted rise that had been forecasted for 2024 in late 2023.

IT spending

Gartner in its IT spending forecast for 2025 highlighted that server sales will increase exponentially, led by the spending on GenAI.

Gartner forecasts that worldwide IT spending is expected to total $5.74 trillion in 2025, an increase of 9.3 percent from 2024.

“Current spending on generative AI (GenAI) has been predominantly from technology companies building the supply-side infrastructure for GenAI,” said John-David Lovelock, Distinguished VP Analyst at Gartner.

“CIOs will begin to spend on GenAI, beyond proof-of-concept work, starting in 2025,” said Lovelock. “More money will be spent, but the expectations that CIOs have for the capabilities of GenAI will drop. The reality of what can be accomplished with current GenAI models, and the state of CIO’s data will not meet today’s lofty expectations.”

And it seems that data centre spending continues to play a major role in overall IT spending figures, with server sales continuing to drive the data centre systems segment.

According to Gartner, data centre systems spending grew by nearly 35 percent in 2024. It said that while the segment will not see a jump equal to that in 2025, it is still set to grow by almost $50 billion in 2025 to $367 billion (a growth rate of 15.5 percent).

This is led by server sales, which are set to almost triple from more than $134 billion in 2023 to $332 billion by 2028, including more than $257 billion in 2025.

“GenAI will easily eclipse the effects that cloud and outsourcing vendors had on previous years regarding data centre systems,” said Lovelock. “It took 20 years for the cloud and outsourcing vendors to build up spending to $67 billion a year on servers. The demand of GenAI will help nearly triple server sales from 2023 to 2028.”

Selling shovels

According to Gartner’s forecast, GenAI is one of the big drivers of this growth, and this was picked up by Vivek Behl, VP Strategy at digital adoption platform WalkMe (acquired by SAP in 2024).

“As Gartner says, CIOs are certainly becoming more realistic with what GenAI can achieve. This means it’s unlikely we will see AI replacing human employees any time soon, but that does not mean people can rest on their laurels,” said Behl.

“In the next year, business use of GenAI will shift up a gear, from ‘text to text’ to ‘text to action’,” said Behl. “This will move businesses further down the road to hyperproductivity, but employees who are unwilling or unable to keep pace with this evolution risk being replaced by people who are.”

“As well as words of warning, there is reason for real optimism in Gartner’s latest forecast. With GenAI at the heart of the predicted 9.3 percent increase in IT spending, the real winners in the gold rush will be the ones selling the shovels,” said Behl.

“Chips have become so critical that Nvidia recently became the most valuable company in the world, while Gartner predicts that GenAI will cause server sales to nearly triple by 2028. Businesses that are providing the tools to either bring AI projects to fruition or help businesses and their employees start putting them to work, will be sat at the centre of a perfect storm,” Behl concluded.

Other areas

Gartner also predicted a 9.5 percent rise in device spending to $805 billion; and a 4.4 rise in communication services spending to $1.6 trillion.

Meanwhile Gartner forecast that spending on software is expected to increase 14 percent in 2025, up from 11.7 percent growth in 2024. Meanwhile, IT services is expected to grow 9.4 percent in 2025, up from 5.6 percent in 2024.

“Software and IT services are a large driver of IT growth,” said Gartner’s Lovelock. “Spending on these segments is expected to be on AI-related projects, including email and authoring. This was a market that, despite its age and having been consolidated down to a small number of players, will add $6.6 billion to global spending in 2024 and $7.4 billion 2025 due in part to GenAI products and services.

“Our forecast projects that $500 billion will be added in spending every year in terms of growth rates. With this in mind, IT spending should cross the $7 trillion mark in 2028,” said Lovelock.