Global generative AI (GenAI) spending is projected to reach nearly USD 644 billion in 2025, marking a significant 76.4% increase from 2024. This surge highlights the growing adoption of artificial intelligence (AI) technologies across various industries, including business operations and consumer products.
In 2025, hardware will dominate GenAI spending, accounting for 80% of total investments. This growth in hardware spending is expected to account for USD 398.323 billion, nearly doubling from USD 199.595 billion in 2024.
This remarkable growth is being driven by the proliferation of AI-enabled devices that manufacturers integrate as a standard feature. Servers will also see substantial investments, projected to account for USD 180.620 billion.
Meanwhile, software spending is set to rise by 93.9%, reaching USD 37.157 billion in 2025, up from USD 19.164 billion in 2024. Services will experience the highest percentage increase among all categories, increasing by 162.6% to USD 27.760 billion compared to the USD 10.569 billion recorded in 2024.
Despite the substantial growth, challenges in GenAI adoption remain. High failure rates in initial proof-of-concept (PoC) initiatives and dissatisfaction with results have influenced expectations for GenAI’s capabilities. These challenges have led foundational model providers to continue investing in GenAI models’ size, performance, and reliability.
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