Businesses are accelerating digital-led initiatives for enhanced productivity, efficiency, and better customer engagement. Investment in advanced technologies like cloud, AI, devices, and software applications is becoming a strategic priority for businesses. According to a new report by Gartner, total IT spending worldwide is expected to reach $5.61 trillion in 2025, a 9.8% rise from 2024.
“While budgets for CIOs are increasing, a significant portion will merely offset price increases within their recurrent spending,” said John-David Lovelock, Distinguished VP Analyst at Gartner. “This means that, in 2025, nominal spending versus real IT spending will be skewed, with price hikes absorbing some or all of budget growth. All major categories are reflecting higher-than-expected prices, prompting CIOs to defer and scale back their true budget expectations.”
Generative AI will influence IT spending, but spending won’t focus just on GenAI Itself. Generative AI requires a high-performance computing system, data storage, and networking resources. Businesses continue to invest in software and devices to enhance productivity, remote work, and customer engagement.
Areas like data centers, devices, and software are expected to grow significantly in 2025, mostly because of updates to hardware for generative AI (GenAI). However, these areas won’t offer much new functionality, even with new hardware.
Organizations increasingly adopt cloud infrastructure for their businesses, driving spending on data centers and software. Hybrid and multi-cloud models are becoming the norm, demanding more investment in scalable IT solutions.
In 2025, spending on servers designed for AI is predicted to be double the spending on traditional servers, reaching $202 billion.
“IT services companies and hyperscalers account for over 70% of spending in 2025,” said Lovelock. “By 2028, hyperscalers will operate $1 trillion dollars’ worth of AI optimized servers, but not within their traditional business model or IaaS Market. Hyperscalers are pivoting to be part of the oligopoly AI model market.”
