IT Spending Forecast Keeps Going Up And Up, But It Won’t Go Away

February 23, 2026 Timothy Prickett Morgan

Every time we turn around, the hyperscalers, cloud builders, and model builders slap down a couple 10 billion dollars in incremental spending on AI systems to fulfill their GenAI dreams, and all the market researchers have to pull out their models and have another whack at trying to case what will be spent in the coming years. This also gives them another chance to tweak their estimates for spending in the prior year, if it needs updating.

The forecasting wizards at Gartner have just released a revised spending breakdown for 2025 and – surprise, surprise! – an upwardly revised forecast for what IT spending will be for this year.

Here is the breakdown for the February 2026 forecast:

And just for reference, here is the forecast from July 2025, which only showed 2024 spending and an early pass at what spending in 2025 would look like:

And for further reference, here is the forecast for 2025 and 2026 that Gartner put out in October 2025 and that we talked about here:

These are such big numbers that it is hard to feel that every minor change is billions of dollars. In the most recent forecast, spending on datacenter systems – servers, storage, and switches – rose by 48.9 percent to $496.2 billion in 2025, which is just a tremendous amount of iron by any standard. Here we sit, hoping and praying that the IBM Power Systems business can break $2 billion in sales this year, and that is a mere fraction of a percent of the IT hardware spending in the datacenter. And if you take out all of the software money above and beyond the base systems hardware and operating system, extracting out the database as well as development tools and middleware, Power Systems is an even smaller part of the IT systems pie.

Like you, we remember when about 40 percent of the commercial datacenters in the world who were driven by small, medium and a few large enterprises that could have chosen any system of record upon which to base their business had chosen an AS/400, and this drove an ecosystem that was well above $20 billion and that represented a significant share of a much smaller datacenter systems market.

What is truly amazing is that thanks to the GenAI boom, datacenter systems spending is expected to grow by 31.7 percent this year, to reach $653.4 billion. To give you some perspective on that figure, the defense budget for the US this fiscal government year 2017 was around $647 billion and is projected to be around $900 billion in fiscal 2026. GenAI spending is growing a lot faster than US defense spending, so there is a day not too distant when the datacenter systems spending in the world will consistently be larger than the US defense budget. Heck, it might even be a large portion of the US defense budget. . . .

The spending for other parts of the IT sector, as you can see from the three tables above, do not change very much. And there is no reason to think they will. Companies of all sizes and stripes will put off upgrading their systems of record for as long as they can, and in many cases they will only do massive server consolidation projects on machines that are five, six, or seven years old to free up space, power, and money for their GenAI projects.

Luckily, the IBM i platform does not run across hundreds of servers at most companies, and generally runs on one box in the corner of the datacenter and doesn’t need much fussing, sometimes with a hot spare for high availability and sometimes with a cloud slice for disaster recovery. The IBM i platform is its own thing, and is a key asset when it comes to having operational data that can feed AI systems and be modernized with AI systems.

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