After sustained rapid expansion in the global AI market, 2026 is expected to usher in a new round of growth. Cloud service providers, AI model developers, and software companies continue to invest hundreds of billions of dollars in this field, driving further market expansion.

According to a new report released by Gartner on Thursday, global AI spending is projected to grow 44% year over year in 2026, reaching $2.52 trillion. The research firm raised its forecast by about $500 billion from its September estimate, when it projected the 2025 market would slightly exceed $2 trillion, up nearly 50% from 2024.

Infrastructure will continue to hold the largest market share, consuming more than half of AI spending in 2026, extending last year's pattern when investments in data centers, servers, and other hardware components totaled nearly $1.8 trillion. AI services, the category with the most concentrated enterprise spending, will remain the second-largest spending area, with revenue expected to grow 40% year over year to $588 million.

Just over three years since OpenAI launched ChatGPT, as agentic automation spreads across industries, about half of software products are expected to include generative AI components. John-David Lovelock, distinguished vice president analyst at Gartner, told Channel Dive, a sister publication of CFO Dive: "The speed of AI is breaking the rules — breaking market norms."

Despite AI's rapid penetration and steep growth curve, many organizations remain in the early stages of adoption, facing challenges in governance, security, and workforce readiness.

According to a recent report from Accenture, the use of AI agents declined in the second half of last year. After surveying 3,350 employees at organizations using AI technology, the firm found that more than half of respondents experienced productivity losses due to low-quality or misleading AI outputs.

In the agentic AI space, the gap between outcomes and expectations has become apparent. Research released by Camunda on Thursday shows that while more than 70% of organizations deployed AI agents last year, only 11% of use cases reached production. The workflow orchestration platform vendor commissioned Coleman Parks to survey 1,150 senior IT decision-makers between September and October.

"A cautious approach to agentic AI has left many organizations unable to move beyond pilots or siloed use cases," Kurt Petersen, senior vice president of customer success at Camunda, said in a statement accompanying the report.

Adoption efforts have also encountered the issue of AI investments lacking tangible returns. Lovelock noted: "In terms of AI expectations, this will be the year with the lowest expectations." In the report, he mentioned that generative AI has crossed the "peak of inflated expectations" on Gartner's hype cycle over the past two years and is now descending into the "trough of disillusionment."

Lovelock advised that in the coming months, enterprises should primarily procure AI through existing software vendors rather than investing in "moonshot projects" with uncertain returns. AI software spending, including generative AI chatbots and autonomous agents, is expected to grow nearly 60% year over year in 2026, reaching $452 billion.

Active M&A environment

Lovelock believes that the combination of rapid growth and sluggish corporate enthusiasm creates favorable conditions for industry consolidation. "When these two situations occur simultaneously, it usually means point solution providers get acquired by solution providers, solution providers get acquired by suite providers, suite providers get acquired by platform providers, and then platform providers start seeking better partnerships."

Over the past month, Microsoft added agentic AI data engineering platform Osmos to its cloud portfolio, Meta acquired AI agent startup Manus, and Snowflake signed an agreement to acquire AI observability platform Observe.

GPU giant Nvidia reached a non-exclusive licensing agreement with AI inference chip maker Groq to obtain the startup's technology and talent. According to CNBC, the deal is worth approximately $20 billion, making it one of the largest transactions in Nvidia's history.

Lovelock believes this deal signals market and capital flows. "We will see companies being acquired for technologies that have not yet generated revenue," Lovelock said, "and we will also see companies being acquired solely for their existing customer base or talent."

As Nvidia's quarterly revenue approached $60 billion in September, the company announced plans to invest up to $100 billion in OpenAI as part of an AI computing partnership. Weeks before announcing the OpenAI deal, Nvidia had already injected $5 billion into CPU supplier Intel.

The scale, scope, and speed of spending raised concerns about an AI bubble in October last year, with economists arguing that technology investment has outpaced recent revenue growth. Lovelock takes a more optimistic view of AI's revenue potential, although he expects some vendors to experience volatility this year. "I can't answer whether there's a stock market problem, but I have no doubt about the revenue AI will generate," he said.

However, the current number of AI vendors in the market may exceed what can survive by 2027. Gartner expects global AI spending to grow another 30% by then, surpassing $3 trillion. "This year we will see consolidation, and some companies will not survive — this is a normal part of the new technology lifecycle," Lovelock said. "The market cannot support the hundreds of players currently in it. We have witnessed a hundred flowers blooming; now it's time to prune the garden."