Bubble talk aside, the bloom on artificial intelligence (AI) is very much alive.
The technology is expected to propel IT spending — especially through the adoption of AI agents — to $1.3 trillion by 2029, according to a new report from market researcher IDC. The four-year forecast signals not only the acceptance of an autonomous workforce by employers but a transformative moment for enterprise IT budgets, especially when it comes to software.
“An important takeaway from this forecast is the clear alignment between the growth in (AI) spending and IT leaders’ trust that effective use of AI can boost future business success,” Rick Villars, group vice president of worldwide research at IDC, said in a statement. “Application and Services providers that are behind in putting AI into their products and not extending them with agents are risking market share losses to companies that made the decision to put AI at the center of their product development roadmap.”
The research also underscores the increasing importance as businesses mull the “interconnection between labor and AI investment,” IDC President Crawford Del Prete said in a statement. “As an example, business leaders will need to pay particular attention to employee roles in an enterprise, and how roles change as agents become more commonplace in business. Agents will change the nature of work, making some roles highly productive, and others obsolete. Workers and enterprises will need to be more agile than ever before to keep pace.”
Fueling the IT binge on AI are several developments, IDC said. Service providers will account for 80% of infrastructure budgets to support hefty increases in AI agent workloads. Meanwhile, spending on AI-enabled applications will increase faster than any segment, triggering major competitive shifts in the software industry.
The forecast also indicates the adoption of agents will accelerate innovation in how companies use technology and code to transform their business. What is more, the growth in AI spending coincides with a spike in the amount of underlying compute capacity required to support agentic demand. In the short term, this will require significant and complex build-out from infrastructure providers, which will be led by cloud providers, according to IDC.
