Summary:
1. IDC predicts that global enterprise IT budgets will shift towards AI investments, causing traditional hardware spending to plateau.
2. The rise of Agentic AI systems will drive this change, leading to increased spending on platforms that build, manage, and secure agents.
3. AI-enabled applications are expected to outpace other segments, prompting a competitive realignment in the software industry and organizational changes within enterprises.
Article:
The landscape of global enterprise IT budgets is undergoing a significant transformation due to the surge in artificial intelligence, as forecasted by IDC. The research firm predicts that traditional hardware spending will hit a plateau as AI absorbs future growth, with global AI investment projected to grow at a compound annual rate of 31.9% between 2025 and 2029, reaching a whopping $1.3 trillion by the end of the forecast period.
This shift is being primarily driven by the emergence of Agentic AI systems, which have the capability to operate independently or in coordinated fleets to perform tasks, manage workflows, and develop new applications. IDC’s analysis indicates that this trend will heavily influence how IT leaders allocate their budgets, with a focus on platforms that cater to building, managing, and securing agents rather than general-purpose compute.
Rick Villars, Group Vice President of Worldwide Research at IDC, emphasizes the importance of embedding AI deeply into products for application and services providers to stay competitive in the market. The alignment between investment growth and IT leaders’ confidence in AI’s ability to drive business outcomes is becoming increasingly evident, with those hesitant to adopt AI at risk of falling behind.
While cloud providers and hyperscalers are expected to continue building compute-heavy environments to support AI workloads, other parts of the IT stack, particularly traditional non-AI servers and storage, are projected to stagnate. This signifies that AI will become the driving force capturing spending growth that was previously directed towards conventional hardware refreshes.
The shift towards AI-enabled applications highlights how AI is reshaping the enterprise technology landscape. IDC projects that service providers will dominate infrastructure spending through 2029, reflecting the scale required to support massive agentic environments. As a result, spending on AI-enabled applications is expected to outpace all other segments, triggering a competitive realignment in the software industry.
Crawford Del Prete, President of IDC, points out the organizational implications of this shift, highlighting that roles within enterprises will evolve rapidly as agents become more commonplace. This evolution will require both workers and enterprises to adapt with unprecedented agility to stay relevant in the evolving digital landscape.
Overall, IDC’s forecast paints a picture of a future where AI-driven innovation defines competitive advantage while reshaping the tech stack beneath it. For enterprise CIOs, the challenge lies in not just investing in AI, but in reallocating budgets from legacy infrastructure towards the emerging foundation of digital business. This shift towards AI investments underscores the need for enterprises to adapt swiftly to stay ahead in the evolving technological landscape.
