Dive Brief:
- Global IT spending will increase nearly 8% year over year to $5.43 trillion in 2025, despite mounting macroeconomic malaise, Gartner said Tuesday. The forecast represents a slight downgrade from earlier this year, when the analyst firm expected global spend to increase almost 10% to $5.61 trillion this year.
- Large-scale AI digitization initiatives will offset an enterprise pause on new spending, according to Gartner Distinguished VP Analyst John-David Lovelock. “Software and services spending growth in 2025 is expected to slow down due to this ‘uncertainty pause,’ but spending in AI-related infrastructure, such as data center systems, continues to surge,” Lovelock said in the report.
- Gartner expects investments in data center hardware to spike more than 40% to nearly half a trillion dollars this year, the report said, almost doubling the growth rate in the January forecast. “Data centers are experiencing a surge driven by Gen AI, with spending on AI optimized servers, which was virtually nonexistent in 2021, expected to triple that of traditional servers by 2027,” said Lovelock.
Dive Insight:
Enterprise IT spending plans took a major hit in April, as the Trump administration sparked fears of a global trade war. Amid the chaos stirred up by shifting tariff policies, executives who began the year bullishly became less sanguine in their outlook.
More than 3 in 5 enterprises started 2025 better positioned than they’d been at the same time last year, according to a Gartner survey of 252 senior leaders conducted between March and May. Less than one-quarter of respondents expected to end the year ahead of where they’d planned.
While IT budgets remain largely unchanged, enterprises are choosing to delay new expenditures, according to Lovelock.
“The IT hardware and infrastructure sectors are particularly affected due to price increases and supply chain disruptions,” he said. “In contrast, ongoing or recurring spending, such as cloud and managed services, is maintaining greater stability.”
Big tech hasn’t flinched. The three largest cloud providers — AWS, Microsoft and Google — committed $100 billion, $80 billion and $75 billion, respectively, to data center capacity expansions this year.
Oracle more than doubled its capital investments to $21.2 billion in its 2025 fiscal year, which ended May 31. The company plans to spend more than $25 billion on data center gear in the next 12 months, CEO Safra Catz said during an earnings call last month.
As IT vendors boost generative AI investments and race to deploy agentic automation tools, enterprises are buying in without ballooning their budgets, according to Gartner. “Spending is being focused on delivered functionality from incumbent software providers,” Lovelock said.
CIOs are favoring simple plug-and-play use cases, Lovelock added in an email, noting that some software vendors aren’t yet charging extra for generative AI features.
“It also gets rolled out as upgrades, add-ons, tiered products, specialized offerings and through various consumption-based pricing models,” Lovelock said. “Enterprises will most often get this functionality as it becomes available.”
