Global spending on artificial intelligence is projected to reach $2.59 trillion in 2026, a 47% increase from the prior year, according to a forecast released by Gartner. This figure reflects an upward revision from Gartner’s earlier estimates due to rising demand for AI infrastructure and agentic tools.
The updated forecast marks an increase from Gartner’s December 2025 projection, which estimated worldwide AI spending at $2.52 trillion, representing a 44% year-over-year growth. The revision highlights the increasing corporate and government demand for AI capabilities, despite concerns surrounding short-term returns on investment.
AI infrastructure, which includes servers, accelerators, memory, storage, power systems, cooling, and data center construction, accounts for more than half of total AI investment. AI services follow as the next largest category, with AI software growing at approximately 60% year-over-year. According to Gartner, spending on agentic AI within software is expected to rise 141% in 2026, reaching nearly $202 billion and is forecasted to surpass spending on chatbots and assistants by 2027.
Major technology companies are largely responsible for the surge in spending. Amazon, Microsoft, Alphabet, and Meta collectively raised their capital expenditure projections for 2026 to about $725 billion during first-quarter earnings calls in April, an increase of roughly $100 billion compared to previous estimates.
Microsoft plans to allocate $190 billion for capital expenditures this year, while Alphabet revised its guidance to between $180 billion and $190 billion. Meta’s forecast is now adjusted to up to $145 billion, with Amazon’s estimate remaining at approximately $200 billion. Microsoft and Meta cited rising component costs as a contributing factor to their increased spending forecasts.
This surge in spending is projected to negatively impact free cash flow. The combined free cash flow of the four tech giants is anticipated to fall to around $4 billion in the third quarter, marking a decade low, as capital investments outstrip revenue growth. Amazon is forecasted to consume about $10 billion in cash this year.
Gartner expects the broader AI market to potentially reach $3.3 trillion by 2027 and $4.7 trillion by 2029, indicating a compound annual growth rate of 33% over that period.
