The AI vendor race is restructuring the technology business landscape, forcing every provider to reevaluate what it takes to compete and win, according to Gartner, Inc.
Gartner’s new report, The AI Vendor Race: What It Takes to Win in Volatile Conditions, examines how competition is unfolding across the AI technology stack — from infrastructure and models to applications and services. Analysts emphasize that simply selling AI tools is no longer sufficient, as enterprises demand tangible business outcomes over traditional provider-enterprise value relationships.
“The AI vendor race is not a single competition with a clear finish line, but a series of overlapping races where the outcomes may range from market leadership to breakthrough innovation or even just survival,” said Anthony Bradley, Group Vice President at Gartner. “Providers must track frequent market shifts to both gain an edge and protect their positioning. Success requires a strong grasp of competitor capabilities, their likely moves, and a deep understanding of enterprise AI adoption behaviors.”
GenAI Market Pressures Rising
The report highlights that GenAI advantages are eroding faster than in past innovation cycles, intensifying competitive pressures. In less than 36 months, GenAI will become a baseline requirement across most offerings. By 2026, Gartner predicts enterprises will spend more on software embedded with GenAI than on software without it.
Key projections include:
GenAI models market: Expected to grow by 149.8% in 2025, surpassing $14 billion. By 2028, growth will stabilize at 38% annually as GenAI becomes standard within applications.
AI-optimized servers: Forecast to expand by 90.9% in 2025. By 2027, nearly all premium computing devices will ship with AI capabilities.
Shifting from Features to Outcomes
Gartner cautions providers against relying on functional, use-case-oriented AI, urging a pivot toward business outcome–driven approaches.
“Less than one in five GenAI projects will achieve their desired business value through 2026,” Bradley said. “To close this gap, product leaders must embed business outcomes into product engineering, marketing, and delivery. Providers who fail to evolve in this way will struggle to remain competitive.”
