Forecast predicts GenAI expectation will drop
Expectations of what GenAI can achieve 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”, says John-David Lovelock, analyst at market research firm Gartner. The statement is made in connection with the company forecasting that worldwide IT spending will total $5.74 trillion in 2025, an increase of 9.3% from 2024.
“Current spending on generative AI (GenAI) has been predominantly from technology companies building the supply-side infrastructure for GenAI. CIOs (chief information officers) will begin to spend on GenAI, beyond proof-of-concept work, starting in 2025.”
“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.”
The forecast says that server sales continue to drive the data center systems segment where spending grew by nearly 35% in 2024.
“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. 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”, the forecast says.
“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”, Lovelock says.
Spending on software is expected to increase 14% to $1.23 billion in 2025, up from 11.7% growth in 2024. Meanwhile, IT services is expected to grow 9.4% to $1.73 billion in 2025, up from 5.6% in 2024.
Software and IT services are a large driver of IT growth. 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.”
The forecast projects that $500 billion will be added in spending every year in terms of growth rates. IT spending should cross the $7 trillion mark in 2028.
International Data Corporation (IDC) forecasts that European spending on AI will reach $133 billion by 2028, growing at a compound annual growth rate (CAGR) of 30.3% over the 2024–2028 forecast period.
“While artificial intelligence itself is not new, the acceleration in AI adoption is largely driven by the attention surrounding generative AI,” says Carla La Croce, IDC research manager..
“GenAI adoption is moving swiftly from early testing and experimentation to more integrated business solutions. The CAGR for GenAI is expected to be 55% over the forecast period, significantly higher than that of more established AI technologies.”
According to IDC, approximately 40% of European companies are making significant investments in GenAI, with plans to invest in training, GenAI-enhanced software, and consulting services over the next 18 months. Additionally, 30% of companies have already deployed GenAI-enhanced applications and services in production environments.
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