Dive Brief:
- Capital expenditures by cloud service providers are expected to increase by almost 40% in 2026, to nearly $600 billion, according to a report from S&P Global. Last year, Microsoft, Amazon, Google, Meta and Oracle spent a combined total of $437 billion, a significant increase of 68% year over year.
- AI-related spend constitutes almost one-quarter of all IT spend, which will increase 9% globally in 2026, “propelled by an insatiable AI infrastructure buildout,” according to S&P.
- Hyperscalers will see continued cloud revenue growth above 20% throughout the year, while enterprise IT budgets might tighten depending on whether businesses start to see a return from their AI investments, S&P predicts.
Dive Insight:
As hyperscalers pour money into AI infrastructure to keep up with rising compute demand, enterprises are waiting on their investments to pay off.
Enterprises likely increased their IT budgets to accommodate AI investments in 2025, with AI features now widely embedded in many applications and tools, the S&P report found. However, “AI-related gains are still nascent.”
Nearly eight in 10 executives believe AI won’t start significantly contributing to enterprise revenue until 2030, according to a study published by the IBM Institute for Business Value. Yet the technology is expected to drive enterprise growth over the next four years.
The slow return on investments won’t dampen enterprise spend on AI. Most executives plan on increasing their AI investments, with more than two-thirds indicating they use AI tools daily, according to an Accenture report.
Globally, IT spend will reach more than $6 trillion in 2026, largely driven by infrastructure demand and AI devices, according to Gartner projections.
“The cost of software is going up and both the cost of features and functionality is going up as well thanks to GenAI,” John-David Lovelock, research vice president and distinguished VP analyst at Gartner, said in a press release.
