Australian IT spending to reach AUD $172.3 billion by 2026

IT spending in Australia is forecast to reach AUD $172.3 billion in 2026, an increase of 8.9% from the previous year, according to research from Gartner.

Spending breakdown

Gartner's analysis identifies significant growth across several IT sectors. The most rapid growth is expected in data centre systems, where spending is forecast to climb 22.5% to AUD $10.1 billion. Of this, server spending is predicted to increase by 30%, reaching AUD $7.7 billion in 2026. These increases are attributed to investments in artificial intelligence-related infrastructure, particularly in AI-optimised servers to support generative AI (GenAI) adoption.

The report outlines the following spending projections for 2026: Devices at AUD $16.4 billion (up 6.6%), software at nearly AUD $60 billion (up 13.6%), IT services at AUD $58.8 billion (up 5.6%), and communications services at AUD $27.1 billion (up 3.6%).

AI infrastructure investment

Continued growth in AI-related spending is expected to play a central role in the Australian IT sector. Gartner analysts highlight the expanding demand for infrastructure to support artificial intelligence initiatives.

"Despite an uncertain environment, investments in AI, cybersecurity and cloud will continue to drive new IT spending in Australia next year," said Andy Rowsell-Jones, Distinguished Vice President Analyst at Gartner. "With AI firmly in the spotlight, Australian organisations are widening their focus from generative AI (GenAI) towards investments in other related AI technologies for real-time intelligence and operational scalability, helping ensure long-term success."

The demand for hyperscale data centres catering to GenAI workloads is leading to rising electricity requirements that utility providers must address. Gartner describes the collaboration between enterprises and service providers as key in accommodating these infrastructure needs.

"The rapid expansion of hyperscale data centres for GenAI is driving huge demand for power, which utility providers struggle to keep up with," said John-David Lovelock, Distinguished Vice President Analyst at Gartner. "It is encouraging to see such strong growth continuing in data centre spending, as enterprises and service providers work together on solutions to support rapid GenAI growth."

Software overtakes IT services

Software will become the largest IT spending category in Australia in 2026, overtaking IT services, according to Gartner's forecast. Software spending is anticipated to grow by 13.6% to almost AUD $60 billion. The shift reflects the trend towards the adoption of AI-enabled software solutions, particularly to enhance operational efficiency and manage evolving compliance and cybersecurity obligations.

"Australian organisations are rapidly migrating to AI-enabled software and cybersecurity tools to enhance workflows, manage compliance and combat threats, which are both commonly delivered as software services," said Rowsell-Jones. "In particular, GenAI is transforming the software landscape by enabling more intelligent, efficient and personalised applications."

Gartner observes that technology vendors are introducing GenAI functionality into software products as a means of addressing new customer use cases and differentiating in a highly competitive market. The firm predicts that by 2028, 75% of software spending will be directed towards solutions with GenAI capabilities as organisations seek greater efficiencies and capabilities in software.

Forecast methodology

The IT spending forecast produced by Gartner is based on comprehensive analysis from over 1,000 vendors across a diverse range of IT products and services. The methodology incorporates primary and secondary research sources to form the basis of Gartner's market size estimates and projections.

The report divides IT spending into five categories: data centre systems, devices, software, IT services, and communications services. The quarterly forecast provides insights into market opportunities as well as sector-specific challenges, assisting organisations in their strategic planning.