Analyst IDC has reported that the IT market has grown by 14%, which represents the largest increase in almost 30 years.
According to IDC, the emergence of a massive artificial intelligence (AI) infrastructure investment wave is driving tech spending around the world, at a rate that has not been seen since the introduction of Windows 95 in 1995.
When Microsoft debuted the reworked operating system and graphical user interface in 1995, its availability aligned with the availability of affordable internet connectivity for the masses, resulting in a spike in demand for PCs at the time. With almost every organisation wanting to invest in AI, IDC forecasts that IT spending is set to reach $4.25tn this year, driven mainly by demand for IT infrastructure to support AI workloads.
IDC’s monthly Worldwide black book shows that this year’s IT spending forecast was increased for a seventh consecutive month in November, which it said reflects continued over-performance and aggressive investments by service providers in AI infrastructure. This month, the forecast also showed strong enterprise software spending, with many organisations continuing with digital transformation and cloud migration projects. IDC expects software spending to increase by 14% this year, with AI deployments adding to investments in security, optimisation and analytics.
IDC’s forecast shows that service provider spending on datacentre infrastructure, which includes server, storage and network equipment, is set to increase by 86% in 2025, reaching almost half a trillion dollars this year.
“AI is the headline of IT market performance in 2025, but most of the actual AI investment this year is concentrated in service provider infrastructure,” said Stephen Minton, group vice-president at IDC.
“This AI investment is partly supported by enterprise spending on core IT products and services, which make up the strong revenue streams of the service providers investing heavily in AI deployment,” he added. “In turn, this AI investment is supporting economic growth and stability, which in turn is supporting the ability of businesses to maintain their investments in cloud services and enterprise software. As a result, we’re currently experiencing a virtuous cycle of tech-driven macroeconomic growth.”
Minton also warned of expected headwinds and downside risks in the 2026 outlook, due to an expected memory component shortage, which he said may drive up PC prices next year. But he was confident there would be no downturn in IT spending.
IDC noted that IT spending increased by 16% in the first quarter or 2025, partly due to the front-loading of PC shipments ahead of anticipated tariffs in Q2. While service providers were responsible for driving some of the IT market growth, IDC noted that enterprise IT spending increased by 11% in Q1 and 10% in Q2.
Discussing the impact of tariffs, Minton said: “Technology demand has been resilient this year in the face of uncertainty around tariffs and a sluggish global economy, but our baseline forecast calls for a stable economy, supported in part by ongoing AI investment. Even in a moderate recession, most IT spending would continue. The likelihood of a ‘perfect storm’ similar to the IT market crash of 2001 remains low.”
