Global IT investments are projected to rise by 7.2% this year, reaching $5.26 trillion, according to an updated forecast from Gartner. By 2025, analysts predict an increase of 9.3% to $5.75 trillion. Spending on data center equipment is currently experiencing a surge of 35%, reaching $318 billion. Next year, the growth rate is expected to slow to 15.5%, but in absolute terms, this still means nearly $50 billion more will be spent on physical infrastructures by 2025.
This trend is primarily driven by the demand for servers for generative AI (GenAI). Gartner analyst John-David Lovelock notes that GenAI will have a more significant impact on data center systems than cloud and outsourcing providers have had in recent years. It took twenty years to increase server spending to $67 billion annually. Now, the demand for GenAI is expected to nearly triple server revenue from $134 billion in 2023 to $332 billion by 2028, with over $257 billion invested next year.
Other beneficiaries of GenAI-related activities include software providers and, to a lesser extent, IT services. Software spending is projected to rise by 11.7% to nearly $1.1 trillion. Next year, an additional 14% increase is expected, bringing the investment volume to approximately $1.24 trillion. Growth rates in the IT service sector are lower, with 5.6% in 2024 (to $1.56 trillion) and 9.4% in 2025 (to $1.74 trillion). However, this growth is sufficient for the service segment to become the largest revenue-generating market segment, surpassing communication services.
Currently, technology companies are the primary investors in building their GenAI infrastructures. Next year, companies from other sectors are expected to invest more, moving beyond feasibility studies into significant projects. Lovelock anticipates that the high expectations for GenAI’s application potential will be tempered. “The capabilities of current GenAI models and the quality of existing data will not meet today’s high expectations,” says the Gartner analyst.
In Europe, a similar development is expected, albeit at a slightly lower level. IT spending is projected to reach $1.28 trillion by 2025, representing an 8.7% increase from 2024. By the end of this year, $1.18 trillion will be invested, a 6.8% increase from 2023. In Europe, the rising development of AI-related infrastructure by technology providers is also driving up spending on data center systems. These expenditures are expected to increase by 11.1% in 2024, surpassing $50 billion for the first time. This includes server spending by application companies, which is expected to rise by 25% due to increasing demand for AI-optimized systems.
Next year, the growth rate is expected to slow to 11%. One reason for this may be the limited success of many GenAI pilots and proofs of concept. Lovelock believes this will prompt European companies to rely more on partners for GenAI applications by 2025, rather than developing them in-house. Consequently, spending on IT services in the AI context is expected to increase from $78 billion this year to $94 billion in 2025.
Regarding the global IT market, the Gartner analyst is also confident that investments will increase by $500 billion annually. In this context, the $7 trillion mark is expected to be surpassed by 2028.