Gartner Forecasts Major IT Spending Increases for 2025: What It Means for the Tech Industry

Companies are constantly evolving to stay ahead of the curve. According to a recent projection from Gartner, global IT spending is set to experience one of the largest increases in recent years, jumping by 9.3% in 2025. This surge is expected to push worldwide IT investments to over $5.7 trillion, a significant milestone that reflects the rapid changes occurring in the tech landscape. While the rise is driven by several factors, artificial intelligence (AI) is taking center stage as a major catalyst for the growth.

Key Drivers of IT Spending Growth in 2025

The IT industry is undergoing profound transformation, and Gartner’s projections highlight the role that various technologies will play in shaping future spending. Although AI infrastructure is a key contributor, it is not the only factor driving this massive increase. Here are some of the primary forces at work:

AI Infrastructure and Generative AI
The rise of generative AI, machine learning models, and large-scale data processing are major drivers behind the growth in IT budgets. In fact, data center spending is projected to jump by nearly 35% in 2024 as companies rush to meet the infrastructure demands of AI technologies. From training AI models to processing massive datasets, organizations are investing heavily in powerful hardware and data storage systems to power AI applications. As AI becomes more integrated into business operations, the demand for advanced infrastructure will continue to grow well into 2025 and beyond.

Price Increases and Device Replacements
Many businesses are also experiencing the lingering effects of the COVID-19 pandemic, especially in relation to device replacements and price adjustments. During the pandemic, many companies delayed large-scale upgrades, but now, as remote work and hybrid models continue to be prevalent, there is a strong push to refresh aging devices. This includes everything from laptops and smartphones to servers and networking equipment. Along with these updates, the overall increase in prices for technology—driven by global supply chain issues and inflation—will further push IT budgets higher.

Software Spending and Expansion
While data centers are seeing significant investment, the software sector is actually the largest portion of the spending surge. Gartner projects that software spending will increase by 14% in 2025, reaching a massive $1.24 trillion, and this will be driven by several key trends:

• Price Increases: With the ongoing pressure from supply chain disruptions and inflation, many software vendors are raising prices for their products and services. This price hike is contributing to overall software spending growth.
• Expanding License Bases: As companies expand their digital operations and grow their customer bases, the need for additional software licenses and cloud services is rising. From SaaS (Software as a Service) to enterprise software solutions, organizations are scaling their technology infrastructure, which drives up demand for software licenses.
• AI Investments: In addition to price increases and license expansion, AI-related software is becoming an essential part of business operations. Whether it's AI for analytics, automation, or cybersecurity, businesses are investing heavily in software that supports the development and deployment of AI solutions. This is helping to fuel the overall growth in software spending.

Implications for Businesses and the Tech Industry

The significant increases in IT spending forecasted for 2025 will have a broad range of implications for businesses and the technology industry:

Increased Competition for AI Talent and Resources
As more companies invest in AI and data center infrastructure, the competition for skilled professionals in these areas will intensify. Companies will need to focus on attracting and retaining talent with expertise in AI, machine learning, and cloud computing. Additionally, the growing demand for advanced hardware and AI processing capabilities could lead to supply shortages or increased costs for certain technologies.

Opportunities for Technology Providers
The projected increase in IT spending is a huge opportunity for technology providers across various sectors, from cloud computing companies to data center infrastructure providers. Businesses in the software, hardware, and IT services sectors can expect increased demand for their products and solutions, especially those that enable AI development, data storage, and security.

Software vendors that offer AI-driven solutions, cloud services, and automation platforms stand to benefit greatly as businesses look to integrate AI into their operations. Additionally, companies offering cybersecurity solutions will likely see growing demand as businesses ramp up their digital transformation and need to safeguard their AI systems and sensitive data.

Digital Transformation and Competitive Advantage
As businesses allocate more budget toward IT and AI, the opportunity for digital transformation increases. Companies that invest wisely in new technologies—whether AI, cloud computing, or software automation—stand to gain a competitive advantage in their respective industries. This shift means businesses will need to be strategic in how they allocate IT spending, ensuring that their investments align with long-term goals such as improving operational efficiency, enhancing customer experiences, and fostering innovation.

Pressure on IT Budgets and ROI
With more spending on IT and AI infrastructure, businesses must be mindful of their return on investment (ROI). Not all technology investments will deliver immediate returns, and it will be important for businesses to track performance and ensure that their technology spend is aligned with broader business objectives. For many, the focus will be on ensuring that AI and digital transformation projects deliver tangible benefits, whether that’s through automation, enhanced data insights, or new revenue streams.

Looking Ahead: The Future of IT Spending Beyond 2025

The projections for 2025 are just the beginning. As businesses continue to embrace digital transformation and AI becomes more ingrained in daily operations, IT spending will likely continue to rise in the coming years. Gartner’s forecast for 2025 serves as a critical indicator of the growing importance of AI and advanced IT infrastructure, but it also highlights broader trends such as price pressures and the need for businesses to modernize their IT environments.

In short, IT spending is on a clear upward trajectory, driven by AI, data centers, and software solutions. For businesses and technology providers, this presents both challenges and opportunities—particularly as companies navigate the evolving landscape of technological innovation and digital transformation.

Conclusion

The projected 9.3% increase in global IT spending for 2025 signals a significant shift in how businesses approach technology and digital transformation. With AI, data centers, and software playing pivotal roles in this growth, companies across all industries must prepare for the changes ahead. Whether you’re a technology provider, a business leader, or an IT professional, understanding these trends will be crucial for capitalizing on the opportunities that lie ahead and staying competitive in an increasingly digital world.