Enterprise AI budgets surge

U.S. companies are pouring money into generative artificial intelligence at a pace rarely seen in software, with enterprise spending reaching $37 billion in 2025. (menlovc.com) Menlo Ventures said that figure was up from $11.5 billion in 2024 and $1.7 billion in 2023, based on a survey of about 500 U.S. enterprise decision-makers and a market model spanning applications, model application programming interfaces, and infrastructure. (menlovc.com) The biggest slice of that 2025 spend, $19 billion, went to application-layer products, the software employees actually use for coding, sales, customer support, human resources, legal work, and other day-to-day tasks. (menlovc.com) Menlo said enterprise generative AI now equals more than 6% of the global software-as-a-service market, a scale it reached within three years of ChatGPT’s launch in November 2022. (menlovc.com) Other surveys show the same budget shift inside information technology departments. Boston Consulting Group said on April 8, 2025 that artificial intelligence and generative artificial intelligence were set for the largest spending increases that year, while devices, server infrastructure, and systems management were headed for cuts. (bcg.com) That change followed an earlier warning from Boston Consulting Group that companies were already squeezing other projects to fund generative artificial intelligence. In its July 16, 2024 survey, the firm estimated generative artificial intelligence budgets would reach 7.6% of information technology budgets by 2027. (bcg.com) The spending wave is landing as artificial intelligence use spreads across corporate operations. Stanford University’s 2025 AI Index said 78% of organizations reported using AI in 2024, up from 55% a year earlier. (hai.stanford.edu) Companies are also spending more on the plumbing around AI, not just the models and chatbots. KPMG cited 2024 research showing 62% of organizations said weak data governance was the main data problem holding back AI initiatives, a sign that cleaning, controlling, and tracing data has become part of the AI budget. (kpmg.com) The backdrop is a broader investment boom. Stanford said U.S. private AI investment hit $109.1 billion in 2024, while global private investment in generative AI reached $33.9 billion. (hai.stanford.edu) The immediate question is whether this spending holds up under pressure to show returns. Menlo’s report argues the market has moved beyond pilot projects, with at least 10 AI products now generating more than $1 billion in annual recurring revenue and at least 50 topping $100 million. (menlovc.com)