By Panos Mourdoukoutas

Heavy investment in artificial intelligence (AI) infrastructure accounted for the majority of IT spending in 2025. It emerged as a key driver of growth across the high-tech sector, as companies anticipated another wave of digital transformation in the U.S. and global economies.

However, the coming year may present a critical test for the industry, with many AI projects still needing to secure financing and demonstrate sustainable returns.

“The year 2025 looks like a strong year for high tech,” Krishna Kandi, a senior software engineer with over 20 years of experience designing and modernizing large-scale, regulated systems in global finance, told The Epoch Times. “AI adoption expanded quickly, cloud platforms became more stable, and many companies reported efficiency gains. That was the visible story.”

“Inside large-scale and regulated systems, the experience was more uneven and often more fragile.”

IT Spending

According to Statista.com, global IT spending is expected to reach $5.6 trillion in 2025, driven primarily by investments in advanced software, cloud computing, and expanded data center projects.

“The AI revolution has sparked a cascade of change, sweeping through industries and transforming the global tech landscape,” it says. “What was once hype has become a driving force, fueling a surge in digital transformation and propelling global IT spending.”

Rising IT budgets further underscore this trend, with 64 percent of technology companies in North America and Europe planning to increase spending in 2025.

The survey highlights several forces driving AI-related investment. One is the expansion of enterprise software systems, which are enabling organizations to shift from reactive to proactive operations. Analysts expect this transition to fundamentally reshape software applications, business processes, and IT operations.

Another trend is the widespread adoption of AI-powered tools, reflecting the growing importance of acquiring AI and machine learning expertise.

A third is the rise of AI-embedded consumer electronics, as evolving consumer expectations push tech companies to integrate AI into everyday products and services.

Bob LaDouceur, chief operations officer at CSP Consultants Group for the tech sector, said the boundary between digital systems and physical infrastructure is increasingly blurred.

“Organizations that connect design, installation, and long-term support under a single, coordinated approach will be better positioned to manage complexity and avoid operational surprises,” he told The Epoch Times.

Meanwhile, a recent IMA report identifies several tailwinds supporting continued growth in the tech industry, suggesting the sector is entering a new phase of expansion.

Risks

At the same time, the report cautions that growth may not be smooth, citing macroeconomic pressures, including regulatory and supply risks, as well as the challenge of shifting from optimization-focused strategies to innovation-driven growth.

“The landscape for the technology industry in 2025 has been defined by two intertwined themes: technological acceleration and a rapidly changing risk landscape,” the IMA report added. “Technology sectors moved decisively from pilot initiatives to full-scale implementation, with artificial intelligence (AI) a dominant technology deployed across operations.”

The report states that the rapid integration of AI has created a complex risk environment in which the pace and anticipation of innovation often outstrip infrastructure readiness, including security, while emerging threats require proactive risk management to protect competitiveness and operational resilience.

Wall Street has been catching up with rising risks of AI-driven growth, weighing big AI spenders that pile debt on projects that fail to create value for capital holders. Oracle, for example, reported on Dec. 10 strong second-quarter fiscal 2026 earnings, fueled by demand for AI-related services. Despite the results, the company’s stock declined as investors weighed the risks associated with its debt-financed expansion to meet AI capacity needs.

Oracle’s total debt now represents 432.51 percent of equity. Its most recent return on invested capital stands at 9.98 percent, below its weighted average cost of capital of 13.44 percent. Economists note that companies that are unable to earn returns above their cost of capital risk eroding shareholder value.

Applied Digital, an AI infrastructure developer, offers another example of the pressures facing large AI spenders. The company carries approximately $700 million in debt, or 63.2 percent of equity. In comparison, its return on invested capital is currently negative at minus-2.82 percent, compared to a weighted average cost of capital of 28.66 percent. Investors appear to be betting on a significant turnaround.

The rising debt levels among AI spenders, combined with weak returns relative to financing costs, have created a broader dilemma for markets. Investors are weighing the promise of future payoffs against the risk that AI investments may fail to deliver expected returns, particularly for firms heavily reliant on borrowing.

Warnings

Warnings about the risks associated with aggressive AI spending are also increasing. A review published by the Harvard Law School Forum on Corporate Governance notes that companies are rapidly investing in AI, including experimental pilot programs, despite uncertainty about their ultimate payoff.

Regulators, including the Securities and Exchange Commission, have also raised concerns, with discussions underway about the potential risks AI poses to the financial system.

Still, some industry leaders expect greater clarity ahead. Jason Williamson, CEO of MythWorx, a new entrant focused on AI systems that mimic human cognition, said the sector will face a significant test in 2026 as it moves beyond hype.

“And with that shift, regulation will tighten up,” he told The Epoch Times. “I believe that guardrails will be a good thing as they further force accountability.”