IDC has reiterated its warnings that a long-drawn war in the Middle East is likely to drastically reduce global IT spending for 2026.
The research firm had already cut its 2026 IT spending growth forecast to 9% because of the conflict, a reduction from the 10% growth rate projected before the US and Israel attacked Iran on Feb. 28.
But any spending growth could drop to just 5% or 6% if the fighting drags on for a long time, Stephen Minton, group vice president at IDC, said during a client briefing last week.
An expected macroeconomic slowdown resulting from global oil shortages and sharply higher energy costs will affect business confidence and consumer spending, Minton said.
The war between the US, Israel, and Iran has shown no signs of slowing, and US President Donald Trump has made increasingly dire threats against Iran. The fighting has already caused disruptions in supply chains that could disrupt hardware upgrades and AI infrastructure buildouts.
IDC’s current forecast is conditional, meaning it’s contingent on the war ending by summer. “If things are wrapped up within the next two or three months…, that does leave half a year for recovery… [for] oil prices to normalize, supply chains to reopen, and for economic growth to recover,” Minton said.
Fighting that drags on beyond that time frame would have a bigger impact on IT spending and economic growth. “The longer this goes on and the longer this leads to elevated oil prices, which could have a significant impact on economic growth and then consequently IT spending in the second half of the year,” Minton said.
IDC expects to provide an updated forecast at the end of April.
Higher energy costs lead to higher electricity bills and higher prices on component shipments. The macroeconomic effect could raise inflation as well as business costs, affecting IT budgets as a result.
IDC already expected slower IT spending in 2026 compared to 2025, when IT spending grew by 14%. Global economies were already reeling from geopolitical tension, tariffs and supply-chain realignment.
Spending on PC upgrades was also expected to be down due to price increases and memory component shortages, Minton said.
Helping to soften the blow has been aggressive AI investments, Minton said.
“As long as that aggressive investment continues by hyperscalers and service providers…, that will provide a certain level of resilience and will cushion some of the impact of any slowdown,” Minton said.
The war has worsened an already difficult economic environment, forcing CIOs to focus on efficiency within existing projects. The assumption is that AI investments will remain strong in the near term, Minton said.
“There are still areas of discretionary spending, new projects, certain digital transformation, project-oriented engagements [that] could be put on hold until 2027, [and] even more device upgrades [that] could be held over until next year,” he said.
Cybersecurity and business continuity are likely to be top priorities, according to Minton.
Enterprises need to plan for resiliency and assume operations could be affected by a data center, internet connection, cloud provider, or supplier going down, said Chris Grove, director of cybersecurity at Nozomi Networks, in an email. “Ensuring they have on-premises operational capabilities will be key,” he wrote.
The war is specifically pushing cloud and data center spending into something of a new risk paradigm in terms of geopolitical risk. “Physical infrastructure is now a target… when cybersecurity was how most service providers and data center operators primarily thought about their disaster recovery,” Minton said.
The fighting has had direct repercussions on data-center operators in the region. Iranian missiles have already hit data centers run by Oracle and Amazon.
Gartner in February — before the fighting broke out — had forecast 10.8% growth in IT spending in 2026 to $6.15 trillion.
At the start of the year, S&P Global had projected 9% growth in global IT spending, driven by AI infrastructure buildouts.