AI gold rush to drive 2026 IT spending — as IT services get the squeeze

Global IT spending will rise 10.8% in 2026, but the increases will be incredibly uneven, with huge spikes in AI and data center outlays far outpacing other categories, Gartner predicts.

Worldwide IT spending will reach $6.15 trillion this year, despite fears of an AI bubble and concerns about inconsistent tariff policies from US President Donald Trump’s administration, Gartner projects.

The increase will largely be driven by AI spending, projected to rise by 80.8% from 2025, and by data center system outlays, up 31.7%. While Gartner sees spending increases in all five IT categories it tracks, spending on communications services will rise by only 4.7%, and spending on devices, PCs, and laptops will increase by only 6.1%, with skyrocketing memory costs prompting many IT buyers to delay device purchases.

Services feel the squeeze

Services providers, meanwhile, are getting squeezed by AI, says John-David Lovelock, a vice president analyst at Gartner. Runaway AI spending, coming from both large hyperscalers and other enterprises, has put pressure on CIOs to ratchet down spending elsewhere, and many have turned to their services budgets to pinch pennies, he adds.

At the same time, IT buyers expect that services providers are using AI to assist their efforts and cut costs, and they are demanding that those savings be passed on to them, he says.

“Services companies are almost penalized because the expectation is that they are going to be using some form of AI or agents or assistance within the delivery,” Lovelock says. “CIOs need to find somewhere that they have control of their budget, and they can pick on the services companies because they’re using AI.”

The AI spending hike, meanwhile, is happening while many observers fear that a stock market bubble is about to pop. Disillusionment about generative AI is high right now, Lovelock says, and concerns about AI agents are building.

But over the longer term, a major shift from an old information technology model to a new intelligence technology model is happening, creating value for AI firms, he adds.

“We’re going to have some people limping along for a while, but we are at the very early years of the new super cycle, which is intelligence technology,” he says. “It’s going to rewrite the rules of value creation, it’s going to rewrite the rules of revenue, and it’s going to rewrite where growth is.”

From Jan. 28 to Feb. 5, the US S&P 500 software and services index dropped 4.6%, losing nearly $1 trillion in value, on fears that AI would upend the traditional software sector. Some of the biggest losers, however, included companies heavily invested in AI, including Microsoft, Salesforce, and ServiceNow.

AI in the trenches

The Gartner prediction on AI spending rings true for several IT leaders.

Software development firm Innowise will see its IT budget increase in 2026 between the high single digits and the low double digits, says Dmitry Nazarevich, CTO there. About half of the budget increase will come from AI, with the rest related to security, modernization, and cost-related initiatives, he adds.

However, the increase in other IT spending is also related to AI. “The increase in spending on security is directly related to the increase in exposure and risk to data associated with the increased attack surface resulting from the introduction of generative AI,” Nazarevich says. “The increase in spending on modernization is partly a result of the fact that legacy or outdated systems limit the effectiveness of AI technology and delay deployment schedules.”

In addition, Innowise is spending more on FinOps because of the unpredictability of computing bills created by AI workloads, he adds.

Duanex, another software development firm, has increased its 2026 IT budget by a whopping 70%, says Oleg Danyliuk, founder and CEO. About 10% of the increase comes from the cost increases in collaboration, security, and other IT tools, he says.

“All the rest is AI,” he adds.

For example, Duanex purchased a corporate ChatGPT subscription, as well as the IntelliJ Idea AI package and Claude Code for software development. The company also hired an additional IT professional for its AI agent team.

A bursting AI bubble shouldn’t affect the company’s IT spending, Danyliuk adds.

“It is important to be flexible in the current dynamic world,” he says. “If AI appears to be a bubble, that would mean that companies will need more developers to code and we will grow. If AI indeed automates as much as everyone expects, we are prepared as well, as we are selling automation projects and consulting.”

Many enterprise customers of Southworks, a third software development firm, are reporting IT budget increases of 15% to 30%, with AI accounting for half to two-thirds of the hikes, says Johnny Halife, CTO at Southworks.

AI-related projects like platform modernization and data foundations are also driving up budgets, he says.

“The lion’s share of that growth is tied directly to AI implementation projects — everything from agentic systems and custom/fine-tuned models to the supporting infrastructure, data centers, GPUs, and cloud capacity that makes it all run,” he says. “It’s the single biggest line item pulling dollars right now, especially as organizations move from pilots and PoCs into scaled production deployments.”