Simon Harrsen explores how technology obsolescence and capital constraints are driving companies toward flexible financing solutions.

The rapid advancement of artificial intelligence is fundamentally altering how businesses approach technology investment. As AI capabilities become integrated into enterprise hardware (from workstations requiring neural processing units to data centers demanding specialized server infrastructure), companies face an accelerating equipment refresh cycle that few anticipated just two years ago.

This technological pressure is creating significant momentum in the equipment finance industry as organizations seek to preserve capital while staying competitive through IT equipment leasing and data center financing strategies.

Summary

AI-driven hardware obsolescence is shortening refresh cycles across PCs, servers and warehouse automation, pushing companies toward flexible financing to preserve capital and stay competitive.The equipment finance industry posted near-record 2025 results as organizations funded AI-capable devices and data-center buildouts, a trend likely to continue with supportive rate cuts and healthy credit conditions.

IT equipment financing models, from operating leases to Robotics-as-a-Service, let firms scale technology while mitigating ownership and obsolescence risk and achieving fast paybacks. Providers that structure agile, lifecycle-aware solutions are best positioned as AI accelerates equipment demand.

The equipment leasing and finance sector experienced one of its strongest periods on record. The Equipment Leasing & Finance Association (ELFA) reported that 2025 was the second-best year in the history of its CapEx Finance Index survey, with new business volume expected to exceed $117 billion,¹ reflecting robust demand as companies navigated technological change and economic uncertainty.

The Hardware Acceleration Cycle

The enterprise technology market is in the midst of a significant hardware transition driven by AI requirements. According to Gartner, worldwide PC shipments grew 8.2% in Q3/25, totaling more than 69 million units.²

“Gartner estimates that the AI PC segment will reach 31% in share of shipments in 2025, up from 15% in 2024, marking a significant shift in market priorities and innovation,” noted Rishi Padhi, research principal at Gartner.³ These AI-capable machines feature integrated neural processing units and enhanced specifications designed to handle on-device AI workloads (capabilities that older systems cannot support).

The infrastructure demands extend far beyond desktop and laptop computers. Data center and server spending has seen explosive growth as organizations build out the computing capacity required for AI workloads. According to International Data Corporation (IDC), server market spending grew 97.3% year-over-year in Q3/25, with unit growth reaching 15.9%.⁴ The market is expected to maintain a compound annual growth rate of 28.7% through 2029,⁵ representing an exceptional expansion period for enterprise infrastructure.

AI-optimized server spending has nearly doubled in a single year. Gartner forecasts that spending on AI-optimized servers reached $268 billion in 2025, up from $140 billion in 2024.⁶ This infrastructure buildout is being driven primarily by cloud service providers and hyperscalers, but enterprises are also upgrading their own data center capabilities to support AI initiatives, often leveraging data center financing to align infrastructure investments with deployment timelines.

The pace of technological change has compressed traditional hardware lifecycle expectations. Equipment that might have remained serviceable for five to six years is now being replaced much sooner to maintain compatibility with AI applications and workflows. Organizations that delay these upgrades risk falling behind competitors who are already leveraging AI-enhanced productivity tools and analytics capabilities.

Equipment Finance as Strategic Enabler

This hardware acceleration is translating directly into demand for equipment financing solutions. The equipment finance industry reached a milestone in 2025, with the sector demonstrating resilience even amid economic uncertainty and market volatility.

“Across the U.S., demand continues to strengthen as companies reassess how they deploy capital amid rapid technological change,” says Wayne Fowkes, executive vice president of the Americas at CHG-MERIDIAN, in comments to ELFA for its November 2025 CapEx Finance Index report. “AI is accelerating refresh cycles for both devices and data-center infrastructure. At the same time, businesses are seeking greater financial flexibility as they navigate uncertain economic conditions. With 2025 shaping up to be one of the strongest years for our industry, we expect this momentum to continue, supported by agile, future-ready investment strategies that set a more resilient path for long-term competitiveness.”⁷

The appeal of equipment financing in this environment is straightforward: it allows organizations to access current-generation technology without depleting capital reserves or taking on the ownership risk of equipment that may become obsolete quickly. AI is influencing equipment acquisition decisions at a fundamental level.

The Equipment Leasing & Finance Foundation’s research found that 42% of equipment and software end-users currently use generative AI, with an additional 42% planning adoption within two years.⁸ Software, computers, office equipment and communications equipment are leading the categories of planned expansion.

More than three-quarters of end-users expect to use financing to cover at least a portion of acquisition costs.⁹ This reflects both the capital intensity of technology upgrades and the strategic preference for preserving cash for other priorities, including AI development initiatives. Many organizations are blending IT equipment leasing with flexible payment structures to manage obsolescence risk across their technology stack.

While AI is clearly accelerating growth in the technology equipment sector, it’s important to note that the equipment finance industry’s strong 2025 performance reflects multiple factors beyond AI adoption alone. The industry benefits from diverse end-market exposure across agriculture, construction, healthcare, manufacturing and transportation sectors, each with its own equipment investment cycles and drivers.

The Warehouse Automation Parallel

The same dynamics playing out in IT equipment are emerging in material handling and warehouse automation. The market for Automated Guided Vehicles (AGVs) and Autonomous Mobile Robots (AMRs) is expected to reach $22 billion by 2030, with AMRs projected to grow at 30% annually between 2024 and 2030. 

This growth reflects familiar pressures: rising labor costs, operational efficiency needs and competitive pressure. Annual costs for around-the-clock forklift operations can exceed $200,000, creating strong economic incentives for automation. Meanwhile, e-commerce sales have grown at 20% annually over the past decade and are projected to continue expanding,¹¹ intensifying pressure on warehouse operations.

Equipment financing is enabling this automation wave. According to LogisticsIQ research, 47% of AGV and AMR deployments in small warehouses are financed under Robotics-as-a-Service subscription models,¹² allowing operators to access automation without significant capital outlay.

These financial structures (typically ranging from $750 to several thousand dollars per robot per month)¹³  align well with operational realities, enabling organizations to scale robotic fleets based on demand while avoiding stranded assets. With payback periods typically ranging from 12 to 18 months,¹⁴ the return on investment remains compelling.

The parallel between IT hardware and warehouse automation is striking. In both cases, technological advancement shortens useful equipment life, creating obsolescence risk for outright purchasers while generating opportunities for equipment finance providers who can offer flexibility and capital efficiency.

Positioning for the Technology Transition

With 2025 now complete and demonstrating record-breaking performance, momentum in equipment finance appears set to continue into 2026. The Federal Reserve’s 75 basis point rate reduction during 2025 is expected to support equipment demand in the coming year.¹⁵ Financial conditions across the industry remain healthy, with delinquencies and losses staying relatively low despite rapid equipment turnover.

The equipment finance industry’s strong 2025 performance reflects its fundamental role in enabling business investment during technological transitions. When companies must upgrade equipment more frequently while preserving capital for strategic priorities, financing provides a practical solution. This dynamic takes on particular importance during periods of rapid technological change like the current AI-driven hardware refresh. 

For equipment finance providers, the opportunity extends beyond simply processing more transactions. Companies that can structure flexible arrangements aligned with uncertain technology lifecycles and understand the specific needs of different equipment types will be well-positioned to capture market share.

The convergence of AI advancement, hardware obsolescence and capital efficiency considerations is creating a favorable environment for equipment finance. As Wayne Fowkes notes, organizations are pursuing “agile, future-ready investment strategies” rather than traditional ownership models. This shift toward flexibility appears likely to persist as the pace of AI technological advancement shows no signs of slowing.

Frequently Asked Questions

Why is AI shortening hardware refresh cycles, and which equipment is most affected?

AI workloads require capabilities that older hardware lacks. AI PCs with neural processing units reached 31% of shipments in 2025 (up from 15% in 2024),¹⁶ while server spending grew 97.3% year-over-year.¹⁷ AI-optimized server spending nearly doubled to $268 billion.¹⁸ Equipment that was once kept for five to six years is being replaced sooner.

How did equipment finance perform in 2025, and what’s the
outlook for 2026?

ELFA reported 2025 as the second-best year in CapEx Finance Index history, with new business volumes exceeding $117 billion.¹⁹ Momentum is expected to continue with rate reductions and healthy credit conditions.²⁰ Over three-quarters of end-users plan to finance acquisitions, with 42% already using generative AI.²¹

Which financing models best mitigate obsolescence risk?

Flexible structures (operating leases, usage-based agreements, as-a-service models) provide access to current technology without ownership risk. IT equipment leasing and data center financing allow enterprises to standardize refresh cycles while preserving liquidity. Robotics-as-a-Service subscriptions range from $750 to several thousand dollars per robot per month,²² with 12 to 18 month payback periods.²³ •

¹“CapEx Finance Index October 2025: Equipment Finance Demand Unfazed by Shutdown, On Track for Second-Best Year on Record.” Equipment Leasing & Finance Association. Nov. 2025.

²“Gartner Says Worldwide PC Shipments Grew 8.2% in Third Quarter of 2025.” Gartner, Inc. Press Release, Oct. 16, 2025

³Ibid

⁴“IDC Servers Market Insights.” International Data Corporation. October 2025. 

⁵Ibid

⁶“Forecast: AI-Optimized Servers, 2023-2029, Worldwide, 2Q25 Update.” Gartner, Inc. 2025. 

⁷“CapEx Finance Index November 2025: Recent Rate Cuts Expected to Bolster Equipment Demand Heading into Next Year.” Equipment Leasing & Finance Association. December 2025. 

⁸“Equipment Finance Industry Horizon Report 2024.” Equipment Leasing & Finance Foundation. Oct. 2024. 

⁹Ibid

¹⁰“Mobile Robots (AGV and AMR) Market to Reach $22 Billion by 2030.” LogisticsIQ. Sept. 2024. 

¹¹LogisticsIQ. “Mobile Robots (AGV and AMR) Market to Reach $22 Billion by 2030.” Sept. 2024. 

¹²“AGV & AMR in Logistics Market Size & Growth, Forecast [2033].” Market Growth Reports. 2025. 

¹³“Warehouse Automation Market (Logistics Automation) Worth $55 Billion by 2030.” 2024. GII Research. 

¹⁴“Mobile Robots in Warehouse Intralogistics: An Expert Analysis.” Inovatica. March 2025. 

¹⁵“CapEx Finance Index November 2025: Recent Rate Cuts Expected to Bolster Equipment Demand Heading into Next Year.” Equipment Leasing & Finance Association. Dec. 2025. 

¹⁶“Gartner Says Worldwide PC Shipments Grew 8.2%.”

¹⁷“IDC Servers Market Insights.” 

¹⁸“Forecast: AI-Optimized Servers.” 

¹⁹“CapEx Finance Index October 2025.” 

²⁰Ibid

²¹“Equipment Finance Industry Horizon Report 2024.” 

²²“Warehouse Automation Market (Logistics Automation).” 

²³“Mobile Robots in Warehouse Intralogistics: An Expert Analysis.” 

Simon Harrsen is Executive Vice President of North America at CHG Meridian.