GenAI will fade in 2025 as a core topic as we get off the treadmill that is large language model innovation and start looking at returns. With agentic AI all the rage going into 2025, it’s safe to say it’ll be a key theme for at least the first half, but like every technology development disillusionment isn’t far behind.

With that backdrop, I’ll take a stab at 2025 and what we’ll see ahead. This is an expanded take of what I’m pondering for 2025. The Constellation Research team will outline its 2025 predictions by category and topic on Jan. 7.

Here’s what I’m expecting in 2025:

The year ahead will be more volatile than usual. Enterprises will see a lot of market volatility, potential supply chain issues and must ponder more macroeconomic concerns over things like tariffs. While IT budgets look great going into 2025, rest assured budgets and outlooks will fluctuate dramatically. Likelihood of happening: 95%.

2025 will be the year that AI driven productivity gains move outside of the tech sector. Companies like Exxon and Lowe’s will generate billions in savings and revenue opportunities using AI. This move to real enterprise value will barely be noticed given none of the companies benefiting the most from AI will be considered AI pure plays. Nevertheless, the value is there and the companies that use AI for competitive edge will thrive. Likelihood of happening: 90%.

Enterprises will wrestle with vendor consolidation as an M&A boom kicks off in technology. A new administration and regulatory regime will mean a variety of mergers. Some of these deals will be great and many will bomb. Wall Street is sure to cheer, but CIOs are going to have to game plan for another Broadcom-VMware scenario that may not be so great for customers. Likelihood of happening; 70% only because I’m not convinced regulators will stand down.

Microsoft and OpenAI will reach an impasse and that frenemy theory of mine will be evident. Microsoft faces risks from being seen as the OpenAI reseller and will have to go out of its way to highlight its model choice. OpenAI has larger ambitions and will simply compete with Microsoft on multiple fronts. There’s too much money at stake for the Microsoft-OpenAI relationship to totally go haywire, but you can expect things to get frosty in 2025. Likelihood of happening: 95%.

Agentic AI will usher in autonomous processes, but enterprises will again find themselves boxed in by platform specific approaches. Ultimately, enterprises will demand that agents work across platforms, data stores and processes. By mid-year, the agentic disillusionment begins because cross-platform communication and negotiation between agents won’t be in place. Lock-in concerns proliferate as much as agents do. Likelihood of happening: 100%.

The AI data center buildout will stall due to power constraints, land, regulation and NIMBY. It won’t help that large language models will plateau in their development. Let’s get real: Energy needs are the limiting factor toward the proliferation of AI factories. How do I know that LLMs will plateau? Executives get really touchy when asked about the topic. The reality is that LLMs may not have enough available data to make big gains. This reality doesn’t mean that the enterprise returns won’t be there, but we won’t be wowed as much as we were in 2023 and 2024. Given that this call may be early the likelihood of it happening is 50%.

Nvidia growth slows due to tough comparisons, the laws of large numbers and the rise of good enough GPUs from hyperscaler custom silicon. The company remains formidable but there’s a big problem with Wall Street: Is there anyone left to buy Nvidia shares? We all own it somewhere. Nvidia’s financials will continue to look great, but expectations are lofty and all it takes is one real or perceived slip. Likelihood of happening: 70%, but timing is very debatable.

Edge computing will become more critical for AI inference workloads and become as critical as hyperscale infrastructure. Why? Data latency and the need to run inference closer to the source. 2025 will be the year where AI meets edge computing. Hell, even the Internet of things is going to matter again. Physical AI will require edge computing and IoT. Likelihood of happening: 35%.

Enterprises will continue to try new revenue models and customers will scream since the op-ex budget is being eaten up by SaaS. Consumption will win out as a model and ride shotgun with seat-based models. More software vendors will run their sales ops through marketplaces, notably AWS marketplace. Vendors are going to pitch consumption and value-based models and customers may or may not go for it. By the end of 2025, the buy side and sell side will agree on a model that’ll work for the AI-driven years ahead. Likelihood of happening: 50%.

Enterprises will need to think through quantum computing strategies as it increasingly will be needed to push competitive advantage and AI forward. Workloads will be moved through the cloud and marketplaces will be critical given that it’s far too early to predict quantum winners. I’ve been saying the upcoming year will be the year of quantum for the last 18 months. Holger Mueller has made that proclamation over the last 3 years. Eventually, blind squirrels find a nut. Likelihood of happening: 50%. Likelihood of happening if quantum stocks continue to go parabolic: 70% just because boardrooms will start asking questions.

ERP comes under fire from multiple corners. Palantir has developed a manufacturing OS and has talked up customer wins. ServiceNow is seen as a platform to ride above ERP. Salesforce is an agentic AI play and could do the same to ERP. SAP is still trying to get customers to migrate to the cloud. Likelihood of this ERP demise: 25%.

Things that didn’t make the cut:

  • There will be a massive cyberattack that’ll force enterprises to rethink their recovery best practices. Is that a prediction or just a way of life?
  • Return to office moves will be delayed. The only companies that are all-in on return to office are the ones with sunk costs and leases in real estate.
  • The IPO market will surge in 2025. Too easy.
  • The growth of Google Cloud will overshadow concerns about Google’s core search business being hurt by regulators and OpenAI encroachment.
  • TikTok will be shut down and global productivity will surge 30%. The shutdown is a coin flip. And that productivity gain is probably conservative.

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