Generative AI has had "no material impact" on IT spending

Generative AI has yet to have a “material impact” on broader IT spending, according to new analysis from Gartner.

The consultancy expects global IT spending to increase by 8% across 2024, reaching a total of $5.1 trillion. This marks a sizable increase on both 2022 and 2023 growth rates, Gartner said.

However, despite a surge in interest and spending on generative AI among businesses globally, Gartner said the technology is yet to prompt any significant increases in the short term.

The consultancy does expect this to change in 2025, however, as more tangible business use-cases and heightened investment in the technology continues to increase.

“In 2023 and 2024, very little IT spending will be tied to generative AI,” according to John-David Lovelock, distinguished VP analyst at Gartner.

While the relative immaturity of generative AI means that firms won’t immediately alter IT budgets to accommodate for the technology, Lovelock noted that many are still investing in broader AI and automation strategies to optimize efficiency.

This sharpened focus on automation is, in part, being driven by a growing interest in generative AI and a belief that early investment in AI and automation will underpin any future generative AI strategies.

“Organizations are continuing to invest in AI and automation to increase operational efficiency and bridge IT talent gaps,” he said.

“The hype around GenAI is supporting this trend, as CIOs recognize that today’s AI projects will be instrumental in developing an AI strategy and story before GenAI becomes part of their IT budgets starting in 2025.”

Interest in generative AI remains high

Since late 2022, businesses globally have been exploring the potential use-cases and operational benefits of generative AI tools, with major industry players such as Microsoft, Google, and Amazon all investing heavily in the technology.

So far this year, the number of organizations using generative AI tools has surged rapidly, according to previous research from Gartner.

A poll of more than 1,400 executives in October found that over half of firms are now using generative AI in pilot schemes (45%) or full production (10%). 

This marks a significant increase compared to March 2023, in which just 15% and 4% respectively were piloting or using the tech in production.

There are warning signs ahead for organizations exploring generative AI, however.

Recent analysis from CCS Insight predicted that generative AI could experience a “cold shower” in 2024 due to the prohibitive costs associated with the technology.  

The cost of training ever-larger models was highlighted as a key financial hurdle for many businesses by CCS Insight. 

Training and implementing generative AI tools is a costly process that even industry heavyweights such as OpenAI have grown concerned about in recent months. 

The Microsoft-backed tech firm recently began exploring the prospect of acquiring an existing semiconductor company to bolster chip supplies and support future growth.