2025 Will See Significant Growth in AI Spending, But Gen AI Will Not Create Expected Value

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As 2025 kicks off, predictions abound on the technology innovations expected in the year ahead. In its new whitepaper, 101 Technology Trends That Will—and Won’t—Shape 2025, analysts from global technology intelligence firm ABI Research. ABI Research analysts identify 54 trends that will shape the technology market and 47 others that, although attracting vast amounts of speculation and commentary, are less likely to move the needle over the next twelve months. In the Artificial Intelligence (AI) & Machine Learning space, AI growth will continue, but it won’t create the anticipated value in 2025.

“2024 has been marked by challenges, from global conflicts and inflationary pressures to political uncertainty. These factors have strained enterprise and consumer spending, leading to market inertia, short-term technology investments, sidelined capital, and the exposure of vulnerable suppliers,” says Stuart Carlaw, Chief Research Officer at ABI Research. “From a technology perspective, many industries and end markets are in that awkward stage of technology adoption. They are formulating implementation strategies, assessing solutions and partners, and trying to see if they have the resources needed to roll out solutions at scale. This is a particularly sensitive time, which tends to suggest 2025 will have tech implementers and end users on the brink of a period of a massive technology shift as they work through these issues.”

What Will Happen in 2025:

Traditional AI spending will grow as enterprises search for pragmatic, ROI-driven solutions

The hype around Generative Artificial Intelligence (Gen AI) is quickly dying down, with companies recognizing the cost, risk, and operational implications of Proofs of Concept (PoCs) with an 80% to 90% failure rate. This will create greater pragmatism in the enterprise market with many turning to “traditional” AI as a strategic alternative that can solve business problems and deliver a much clearer Return on Investment (ROW). Amazon Web Services (AWS) has shown that over 85% of projects in 2024 were not based on Gen AI—and this trend is likely to continue. Vendors should change their approach to Gen AI and view it as a solution that can be sold on top of traditional AI models with a synergistic value proposition.

What Won’t Happen in 2025:

Gen AI will STILL not create expected value

By 2025, many enterprises, large and small, will have implemented Gen AI-related products and tools across various business processes. These will still not meet the high expectations for this supposedly revolutionary technology. Value creation will be constrained by technology and business challenges, and implementation costs will be higher than expected. Many enterprises have faced significant upfront costs, including data organization, fine-tuning, cloud storage, and strategic overhauls. Due to risk aversion and other factors, most enterprise implementations have been constrained to low-risk, low-value use cases. With Gen AI not living up to expectations, expect projects to be abandoned, with many enterprises focusing on quick and easy wins.