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What's the State of AI Costs in 2025?

Bill Buckley
CloudZero

Artificial intelligence (AI) is radically shifting how organizations operate and provide value, running the gamut from intelligent automation to machine learning at scale. It's become a competitive necessity, and organizations are eager to benefit from AI's efficiency boost and innovation possibilities.

Yet, while companies adopt AI at a record pace, they also face the challenge of finding a smart and scalable way to manage its rapidly growing costs. This requires balancing the massive possibilities inherent in AI with the need to control cloud costs, aim for long-term profitability and optimize spending.

CloudZero's State of AI Costs in 2025 report examines how (and how much) companies are investing in AI — and whether they can confidently calculate the return on that investment (ROI). The report reveals a dynamic, volatile situation in which AI's budgets and momentum are growing quickly, as are organizations' expectations about its value. Yet these same companies are experiencing limited AI governance, misalignment and difficulty determining AI ROI. Now that cloud-based AI tools claim the biggest slice of the budget pie, attribution and cost visibility are crucial. Without them, organizations face the risk of unpredictable and unsustainable AI spend.

Some of the key takeaways our report found included:

  • AI spending is skyrocketing – This year, average monthly AI budgets will increase by 36%. That signals a big pivot toward larger, more complex AI initiatives.
  • Companies are struggling to evaluate AI ROI – Only 51% of companies definitively said they felt confident calculating the ROI of AI initiatives, largely due to an increasing visibility gap. Concurrently, cloud-based tools are dominant, making cloud cost visibility and attribution essential for optimizing AI ROI.
  • Unclear profitability remains a challenge – The most popular AI tools are designed for scalability, automation, and cloud deployment, yet their profitability remains unclear without effective cost tracking.

AI Spending on the Rise

Last year, organizations spent an average of $62,964 per month on AI. The 2025 report shows this amount will increase by 36% to $85,521. It's also noteworthy that the portion of companies planning to invest over $100,000 per month in AI tools will double — 40% this year compared to just 20% last year.

This significant spending uptick suggests that companies are increasing their AI projects to reap the benefits they promise. However, as their spend rises, businesses must ask this essential question: How confident are we about the ROI we're getting from our AI initiatives?

Prioritizing AI Explainability

This year's report revealed that 44% of respondents plan to invest in improving AI explainability. Their goals are to increase accountability and transparency in AI systems as well as to clarify how decisions are made so that AI models are more understandable to users. Juxtaposed with uncertainty around ROI, this statistic signals further disparity between organizations' usage of AI and accurate understanding of it.

In addition to explainability, businesses will prioritize AI robustness and security (41%), computing and cloud resources (39%), and improving customer experience (39%) this year. These priorities suggest a pivot toward AI deployments that are more scalable, transparent, and responsible.

Why Is It So Hard to Measure ROI?

Why is measuring AI's ROI still so hard for many businesses? The main reasons are:

  • Cloud expenses, maintenance, and other hidden costs
  • Difficulty separating the impact of AI from other business factors
  • Difficulty attributing AI costs to the right sources

Consequently, 49% of companies do not believe strongly in their AI ROI tracking. This speaks to a need for a stronger and more consistent cost attribution and tracking approach.

ROI Confidence Comes from Cost Optimization Tools

Of the companies that use third-party platforms, over 90% reported high awareness of AI-driven revenue. That awareness empowers them to confidently compare revenue and cost, leading to very reliable ROI calculations.

Conversely, companies that don't have a formal cost-tracking system have much less confidence that they can correctly determine the ROI of their AI initiatives. 41% of participants said they only "somewhat agree" about their ability to do this. These responses underscore the importance of implementing a formal and reliable cost-tracking system to evaluate ROI accurately.

Pairing AI Innovation with Cost Intelligence

Even the best-planned AI projects can become unexpectedly expensive if organizations lack effective cost governance. This report highlights the need for companies to not merely track AI spend but optimize it via real-time visibility, cost attribution, and useful insights. Cloud-based AI tools account for almost two-thirds of AI budgets, so cloud cost optimization is essential if companies want to stop overspending.

Cost is more than a metric; it's the most strategic measure of whether AI growth is sustainable. As companies implement better cost management practices and tools, they will be able to scale AI in a fiscally responsible way, confidently measure ROI, and prevent financial waste.

Methodology: This report is based on a survey conducted by CloudZero of 500 US software engineers, senior managers and above in organizations with 250 to 10,000 employees. The survey was conducted in March 2025. 

Bill Buckley is SVP of Engineering at CloudZero

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What's the State of AI Costs in 2025?

Bill Buckley
CloudZero

Artificial intelligence (AI) is radically shifting how organizations operate and provide value, running the gamut from intelligent automation to machine learning at scale. It's become a competitive necessity, and organizations are eager to benefit from AI's efficiency boost and innovation possibilities.

Yet, while companies adopt AI at a record pace, they also face the challenge of finding a smart and scalable way to manage its rapidly growing costs. This requires balancing the massive possibilities inherent in AI with the need to control cloud costs, aim for long-term profitability and optimize spending.

CloudZero's State of AI Costs in 2025 report examines how (and how much) companies are investing in AI — and whether they can confidently calculate the return on that investment (ROI). The report reveals a dynamic, volatile situation in which AI's budgets and momentum are growing quickly, as are organizations' expectations about its value. Yet these same companies are experiencing limited AI governance, misalignment and difficulty determining AI ROI. Now that cloud-based AI tools claim the biggest slice of the budget pie, attribution and cost visibility are crucial. Without them, organizations face the risk of unpredictable and unsustainable AI spend.

Some of the key takeaways our report found included:

  • AI spending is skyrocketing – This year, average monthly AI budgets will increase by 36%. That signals a big pivot toward larger, more complex AI initiatives.
  • Companies are struggling to evaluate AI ROI – Only 51% of companies definitively said they felt confident calculating the ROI of AI initiatives, largely due to an increasing visibility gap. Concurrently, cloud-based tools are dominant, making cloud cost visibility and attribution essential for optimizing AI ROI.
  • Unclear profitability remains a challenge – The most popular AI tools are designed for scalability, automation, and cloud deployment, yet their profitability remains unclear without effective cost tracking.

AI Spending on the Rise

Last year, organizations spent an average of $62,964 per month on AI. The 2025 report shows this amount will increase by 36% to $85,521. It's also noteworthy that the portion of companies planning to invest over $100,000 per month in AI tools will double — 40% this year compared to just 20% last year.

This significant spending uptick suggests that companies are increasing their AI projects to reap the benefits they promise. However, as their spend rises, businesses must ask this essential question: How confident are we about the ROI we're getting from our AI initiatives?

Prioritizing AI Explainability

This year's report revealed that 44% of respondents plan to invest in improving AI explainability. Their goals are to increase accountability and transparency in AI systems as well as to clarify how decisions are made so that AI models are more understandable to users. Juxtaposed with uncertainty around ROI, this statistic signals further disparity between organizations' usage of AI and accurate understanding of it.

In addition to explainability, businesses will prioritize AI robustness and security (41%), computing and cloud resources (39%), and improving customer experience (39%) this year. These priorities suggest a pivot toward AI deployments that are more scalable, transparent, and responsible.

Why Is It So Hard to Measure ROI?

Why is measuring AI's ROI still so hard for many businesses? The main reasons are:

  • Cloud expenses, maintenance, and other hidden costs
  • Difficulty separating the impact of AI from other business factors
  • Difficulty attributing AI costs to the right sources

Consequently, 49% of companies do not believe strongly in their AI ROI tracking. This speaks to a need for a stronger and more consistent cost attribution and tracking approach.

ROI Confidence Comes from Cost Optimization Tools

Of the companies that use third-party platforms, over 90% reported high awareness of AI-driven revenue. That awareness empowers them to confidently compare revenue and cost, leading to very reliable ROI calculations.

Conversely, companies that don't have a formal cost-tracking system have much less confidence that they can correctly determine the ROI of their AI initiatives. 41% of participants said they only "somewhat agree" about their ability to do this. These responses underscore the importance of implementing a formal and reliable cost-tracking system to evaluate ROI accurately.

Pairing AI Innovation with Cost Intelligence

Even the best-planned AI projects can become unexpectedly expensive if organizations lack effective cost governance. This report highlights the need for companies to not merely track AI spend but optimize it via real-time visibility, cost attribution, and useful insights. Cloud-based AI tools account for almost two-thirds of AI budgets, so cloud cost optimization is essential if companies want to stop overspending.

Cost is more than a metric; it's the most strategic measure of whether AI growth is sustainable. As companies implement better cost management practices and tools, they will be able to scale AI in a fiscally responsible way, confidently measure ROI, and prevent financial waste.

Methodology: This report is based on a survey conducted by CloudZero of 500 US software engineers, senior managers and above in organizations with 250 to 10,000 employees. The survey was conducted in March 2025. 

Bill Buckley is SVP of Engineering at CloudZero

Hot Topics

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Part 4 outlines the challenges enterprise face when adopting AI observability. The main challenge is that AI complexity compounds at every stage of maturity. LLM-based applications introduce new behavior, dependencies, and quality considerations, while Agentic AI adds further failure modes as systems make decisions and take actions ...

Part 3 reports on the current state of AI observability. Most experts agree: enterprises are moving faster with AI than they are with the operational discipline needed to run it safely ...

When discussing AI Observability, one of the first questions that arises: Is this just an extension of traditional observability or is this a whole new type of tool? Part 2 compares traditional observability with AI observability ...

In this extensive 14-part series that will post over the next three weeks, experts across observability and AI will provide insight and opinions on the need for AI Observability, the challenges, the benefits, the current state, and predictions for the future ...

Amid rising complexity, organizations are moving quickly toward agent-driven operations: AgenticOps, according to The Impact of Agentic AI on Network Operations, a new report from Cisco ...

AI, automation, and enterprise software give organizations an extraordinary amount of leverage. Work that once required hours can happen in minutes. Information buried across systems can be analyzed almost instantly. Complex workflows can be coordinated across teams with far less manual intervention. That leverage creates a temptation to start with the technology ...

Everyone wants to talk about models. Compute clusters. Benchmark scores that climb a fraction of a point and make headlines anyway. It's an easy conversation to have because it's measurable. But it's also increasingly beside the point ...

For more than a decade, the default infrastructure play has been simple. Move more workloads to the cloud, retire on-premises gear and treat the data center as a cost to shrink. That logic held while public cloud offered near-limitless capacity at predictable prices, and AI demand is now testing both halves of that assumption ...

Most enterprise IT leaders can tell you exactly how many applications are running across their organization. They can surface a dashboard showing telecom spend by region, pull a report on SaaS license utilization, or call up a real-time view of mobile device inventory. The data is there, and IT leaders have largely delivered on the promise of visibility. Yet, in most organizations, that visibility has not translated into business value ...

Government agencies are largely misjudging their level of AI governance as the technology permeates their organization, according to Racing to Deploy: How Public Sector AI Adoption is Moving Faster Than the Foundations Needed to Support It, a new report from SolarWinds ...