Gartner is projecting worldwide IT spending to jump by 9.3% in 2025, one of the largest percentage increases in this century, and it’s only partially driven by AI.
Gartner’s new 2025 IT spending projection, of $5.75 trillion, builds on its prediction of an 8.2% growth this year, with data center spending increasing by nearly 35% in 2024 in anticipation of generative AI infrastructure needs.
Data center spending will increase again by 15.5% in 2025, but software spending — four times larger than the data center segment — will grow by 14% next year, to $1.24 trillion, Gartner projects. The software spending increases will be driven by several factors, including price increases, expanding license bases, and some AI investments, says John Lovelock, distinguished vice president analyst at Gartner.
“We have companies trying to build out the data centers that will run gen AI and trying to train AI,” he says. “Next year, that spending is not going away. The tech companies are still having to run flat out.”
By 2026, hyperscalers will have spent more on AI-optimized servers than they will have spent on any other server until then, Lovelock predicts. This spending on AI infrastructure may be confusing to investors, who won’t see a direct line to increased sales because much of the hyperscaler AI investment will focus on internal uses, he says.
“Generative AI is likely to confuse the capital investor as much as any technology ever has,” he adds.
Free the AI
At the same time, most organizations will spend a small percentage of their IT budgets on gen AI software deployments, Lovelock says. In some cases, the AI add-ons will be subscription models, like Microsoft Copilot, and sometimes, they will be free, like Salesforce Einstein, he says.
In many cases, CIOs and other IT leaders have moved past the peak expectations about what gen AI can do for their organizations and are headed into more realistic ideas about the future of the technology, Lovelock adds.
“The expectation CIOs have for what generative AI can do for them will continue to drop all of next year,” he says. “This year, they did POCs, but it didn’t work out. The key message was, ‘Pace yourself.’”
While AI projects will continue beyond 2025, many organizations’ software spending will be driven more by other enterprise needs like CRM and cloud computing, Lovelock says.
Forrester also recently predicted that 2025 would see a shift in AI strategies, away from experimentation and toward near-term bottom-line gains.
Device replacement cycle
In addition to large percentage increases in the data center and software segments in 2025, Gartner is predicting a 9.5% growth in device spending. Device spending, which will be more than double the size of data center spending, will largely be driven by replacements for the laptops, mobile phones, tablets and other hardware purchased during the work-from-home, study-from-home, entertain-at-home era of 2020 and 2021, Lovelock says.
Even though many device makers are pushing hard for customers to buy AI-enabled products, the market hasn’t yet developed, he adds. Still, after 2028, it will be difficult to buy a device that isn’t AI optimized.
“The buying cycle amongst consumers hasn’t really changed,” he says. “They go and determine how much money they have to buy one of these devices, and then they get the best device they can for that money.”
Spending on advanced IT
Some business and IT leaders say they also anticipate IT spending increases during 2025.
TRECIG, a cybersecurity and IT consulting firm, will spend more on IT in 2025 as it invests more in advanced technologies such as artificial intelligence, machine learning, and cloud computing, says Roy Rucker Sr., CEO and president there. These advanced technologies will be “crucial for maintaining a competitive edge, improving operational efficiency, and enhancing the customer experience,” he says.
The company also plans to increase spending on cybersecurity tools and personnel, he adds, and it will focus more resources on advanced analytics, data management, and storage solutions.
Although Rucker raises concerns about the global economy and rising technology costs, he says many IT spending increases will be necessary.
“The rapid accumulation of data requires more sophisticated data management and analytics solutions, driving up costs in storage and processing,” he says. “These areas of spending are not just responses to current trends but are strategic investments that will foster long-term innovation, resilience, and competitive advantage.”
Global IT and outsourcing firm Computer Generated Solutions doesn’t anticipate a major increase in IT spending in 2025, says John Samuel, global CIO. The company will still prioritize IT innovation, however.
“We’re consistently evaluating our technology needs to ensure our platforms are efficient, secure, and scalable,” he says. “Our approach is focused on maximizing the impact of existing IT resources and selectively investing in technologies that directly align with client outcomes and long-term growth.”
Samuel agrees with Gartner’s projections, however. There’s a broader market trend of increased investment, including spending on AI and automation, he says.
“At CGS, we’ve seen growing demand from clients for AI-driven solutions that address complex technology challenges, streamline workflows, and create more personalized customer experiences,” he says. “This increased focus on AI is driven by its proven ability to accelerate decision-making, improve accuracy in forecasting, and support scalable growth initiatives.”
