Forecast: AI drives IT spending, but could disappoint high expectations

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According to an updated Gartner forecast, global IT investments will increase by 7.2% to 5.26 trillion US dollars this year. For 2025, the market research firm's analysts are forecasting an increase of 9.3% to 5.75 trillion dollars. Spending on data center equipment is currently experiencing a push of 35% to 318 billion dollars. In the coming year, the pace of growth is expected to slow to 15.5 percent. In absolute figures, however, this means that almost fifty billion dollars more will be spent on physical infrastructures in 2025.

This development will be driven primarily by the demand for servers for generative AI (GenAI). "GenAI will easily eclipse the effect that cloud and outsourcing providers have had on data center systems in recent years", comments Gartner analyst John-David Lovelock on the market development. It would have taken twenty years to increase spending on servers to 67 billion dollars per year. GenAI demand would now help to almost triple server sales from 134 billion dollars in 2023 to 332 billion dollars by 2028. More than 257 billion dollars are to be invested in the coming year.

AI models could disappoint expectations

Other beneficiaries of GenAI-related activities include the providers of software and –, with a few exceptions – IT services. According to the forecast, software expenditure will increase by 11.7 percent to just under 1.1 trillion dollars. A further fourteen percent is expected to be added next year, so that the investment volume will probably amount to 1.24 trillion dollars. The growth rates in the IT service business will be considerably lower in 2024 (5.6 percent to 1.56 trillion dollars) and 2025 (9.4 percent to 1.74 trillion dollars). However, they are sufficient for the service segment to move ahead of communication services as the submarket with the highest turnover.

According to Gartner, it is currently primarily technology companies that are investing considerable sums in the development of their GenAI infrastructures. In the coming year, according to the forecast, companies from other sectors are also expected to spend more money and invest in relevant projects beyond mere feasibility studies. However, Lovelock expects the high hopes for the application potential of GenAI to be put into perspective at the same time. "The possibilities of the current GenAI models and the quality of the existing data will not be able to meet today's high expectations," says the Gartner analyst.

Europe less generous

The market research company expects a similar development for Europe, albeit at a slightly lower level. IT spending is expected to reach a total volume of 1.28 trillion dollars in 2025. This corresponds to an increase of 8.7 percent compared to 2024. 1.18 trillion dollars will be invested by the end of the current year, which is 6.8 percent more than in 2023.

In Europe, too, the increasing development of AI-related infrastructure by technology providers is currently driving up expenditure on data center systems. They are expected to increase by 11.1% in 2024, exceeding the 50 billion dollar mark for the first time. This includes server expenditure by application companies, which is expected to rise by 25 percent as a result of the increasing demand for AI-optimized systems.

More partners, fewer in-house AI applications

In the coming year, however, the pace of growth will slow to eleven percent. One reason for this may be the limited success of many GenAI pilots and proofs of concept. According to Lovelock, this will prompt European companies to no longer develop their GenAI applications themselves, but to increasingly rely on partners in 2025. Accordingly, the share of spending on IT services in the AI context is set to rise from 78 billion dollars this year to 94 billion dollars in 2025.

With a view to the overall global IT market, the Gartner analyst is also convinced that investment will increase by 500 billion dollars every year in the future. Against this backdrop, the seven trillion dollar mark is likely to be exceeded by 2028 at the latest.

(nen)