World War Fee Gartner has trimmed its growth forecast for worldwide IT spending in 2025 as an “uncertainty pause” hits net new spending, caused in part by the unpredctability of US President Donald Trump’s trade tariff policy.
In January, the tech analyst estimated growth in global IT spending this calendar year would hit $5.61 trillion, up 9.8 percent versus the prior twelve months. Now it expects expenditure to rise 7.9 percent.
The adjusted figure is related to changes in exchange rates and CIOs pausing net-new spending, which began to show itself from April when Trump ratcheted up his threats of imposing higher taxes on US imports.
John-David Lovelock, distinguished vice president and analyst at Gartner, said the US was in the middle of “a reboot of its global trade policy” in reference to the tariffs proposed by Trump, many of which are still in negotiation, notably with the EU.
“The rest of the world is taking a pause,” Lovelock said. “It’s not fair to say that the geopolitical situation is causing it. It’s not even really fair to say that it’s a macroeconomic condition, although you will hear that often. It’s not about GDP or interest rates or inflation or unemployment. It’s about ‘we’re not sure where this reboot is going to land, and we’re going to pause until we do figure it out’.”
As a result, many organizations have halted expansion, delaying product purchases and hiring. “They’re pausing new IT spending,” Lovelock said. “Budgets aren’t affected yet, they’re still fully enforced. They’re just pausing new spending.”
Investment bank Jefferies noted some months back that CIOs had frozen projects as they take stock of how tariffs may impact them. An incoming wave of tariffs scheduled for August 1 are expected to result in tech prices becoming more expensive.
IT hardware and infrastructure are likely to be most affected by changes to US trade policy, Gartner says, and they may see price increases and supply chain disruptions as a result. Recurring spending, for example on cloud and managed services, is likely to be more stable. However, the growth in AI-optimized servers is helping to drive spending. Next year, investment in them is expected to triple spending on conventional servers, which are still seeing growth.
“This is from a market that didn’t exist in 2022,” Lovelock explained. “It’s taken us 20 years to get to this level of traditional server spending, and that includes when we started going through globalization, when we went through that managed services phase, all of the servers that have been bought drive all the cloud around the world. All the services that run all the business, we see no change, no deflection in any amount of spending on that, but we will spend triple that number on GenAI servers.”
Cloud vendors and the largest AI companies are behind this demand as they try to ensure they are among the last standing in the market, which is expected to go through an extinction phase, after which there will be two or three mainstream players, alongside a handful of niche vendors with much lower market share.
However, there is no investment bubble in AI, Lovelock claimed. “We are in a normal emerging market situation where there are many new players in the market. Some of them are not going to make it, some are going to transform into something new, and some are going to get bought. But no, there is no GenAI bubble.” ®