The AI Boom Will Lift IT Spending Next Year

published 28 November 2025

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It’s a repeat of the 1990s heyday for information technology sellers. “AI is driving the strongest IT spending growth since 1996,” according to Stephen Minton, an analyst at tech market research firm IDC.

Global IT spending will jump 10% in 2026 compared with 2025, according to Gartner, a tech market research firm, pushing the IT market above $6 trillion. This comes after a very strong 2025.

Spending on AI data centers leads the way, with nearly 20% growth in the $500 billion data center market, an especially big windfall for Nvidia, the leading seller of AI chips. These “fantastically expensive” AI-optimized servers continue to sell as fast as they can be made, said John Lovelock, an analyst at Gartner, in a recent online presentation.

North America dominates global spending on AI servers for data centers, accounting for half of the total, according to Gartner. Giant AI builders such as Alphabet, Amazon, Meta and Microsoft are set to make up two-thirds of the spending as they race to improve their AI.

Top AI systems are seeing exploding sales, as businesses and governments shell out more money to access advanced AI tools from Google, OpenAI, Anthropic, Mistral AI, Databricks, Alibaba and others. Gartner expects a staggering 67% yearly spending growth rate on generative AI models through 2029.

Spending will be strong on cloud computing, software and IT services, too. Software sales are boosted by vendors hiking prices to account for new AI features, found in software used for analytics, sales, supply chain management and more. Software vendors feel intense pressure to introduce AI features. “It will be an extinction-level event for software not to have generative AI feature functionality in their product,” said Lovelock.

Smartphone and PC sales are in for solid growth as consumers and businesses seek out new AI-enabled models that can run AI software directly on the device. There are tailwinds beyond AI, such as an ongoing shift to cloud computing from local servers, especially by smaller companies. The expiration of support for Windows 10 by Microsoft also continues to spur companies to update PC fleets.

This level of spending is not sustainable forever, Minton noted in a recent online presentation of IDC’s forecast. But he also doesn’t see any signs of a bubble about to burst. However, there is a bit of circularity to current IT spending growth, as AI spending lifts the overall economy, which helps companies and boosts business sentiment. That drives business IT spending, including investments in AI.

Businesses express some anxiety about spending more on IT, but it’s not dinging budgets yet, with business tech spending poised to rise 10%. Many companies are starting to think of AI as a necessity to compete. Meanwhile, a lot of spending can’t be cut because it’s for must-have IT, such as cloud computing. Among the IT categories most immune to budget cuts: AI tools, software and security.

Next year is likely to be a big year for businesses racing to benefit from AI, so here’s some business advice: Have an AI policy that offers guidance to workers about what’s allowed and what’s not, and sets the rules for security and privacy. Break individual jobs into small tasks and see if AI can automate or augment a few of them.

Test and closely evaluate pilot projects. Encourage employees to test and use AI tools that the company approves. Consider sharing short video tutorials on best practices. Experiment with free AI chatbots and harness the AI tools in software already in use at your business. Many companies are initially focusing on business productivity. AI can save time by summarizing meetings, emails and reports. Or it can brainstorm or analyze data, allowing workers to make more efficient use of their time and effort.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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John Miley is a Senior Associate Editor at The Kiplinger Letter. He mainly covers AI, technology, telecom and education, but will jump on other business topics as needed. In his role, he provides timely forecasts about emerging technologies, business trends and government regulations. He also edits stories for the weekly publication and has written and edited email newsletters.

He holds a BA from Bates College and a master’s degree in magazine journalism from Northwestern University, where he specialized in business reporting. An avid runner and a former decathlete, he has written about fitness and competed in triathlons.