As businesses prepare for 2026, the integration of artificial intelligence (AI) into their operations is increasingly seen as essential for growth, with many experts noting that companies not leveraging AI budgets may struggle to thrive. A shift occurred in 2025 as AI spending transitioned from being viewed as an “innovation fund” to becoming a core component of IT budgets. In 2026, AI is expected to be the primary driver of growth not only in software but across the entire U.S. economy and beyond.
Recent data from a survey of 100 enterprise chief information officers (CIOs) conducted by Andreessen Horowitz reveals that enterprise leaders anticipate an average growth of approximately 75% in large language model (LLM) budgets over the next year. One CIO noted the dramatic shift in budget allocation, stating, “What I spent in 2023 I now spend in a week.” In a stark contrast to the previous year, innovation budgets—once accounting for 25% of LLM spending—have plummeted to just 7%. This indicates that AI has matured from experimental use to a critical operating expense.
According to research from ISG, while overall IT budgets are projected to increase by only 1.8%, AI spending is expected to rise by 5.7%, with nearly a quarter of enterprises reporting plans for increases exceeding 10%. AI is capturing 30% of the total increase in IT budgets, despite making up a small percentage of overall expenditures. Gartner forecasts that global AI spending will approach $1.5 trillion in 2025. Furthermore, enterprise software and infrastructure alone are expected to account for nearly $500 billion in spending by 2026. These trends underscore a fundamental shift in how companies prioritize their investments in technology.
The implications for business-to-business (B2B) companies are significant, particularly given the brutal math at play: average IT budget increases hover around 2.79%, while vendors are raising prices by an average of 9%. This means companies are often in a deficit before considering new purchases, forcing them to reallocate existing budgets to fund AI initiatives.
In examining the public markets for 2025, a clear divide has emerged between companies that have effectively tapped into AI budgets and those that have not. Among the notable winners are Palantir, which saw its stock rise by 142%, and Cloudflare, up by 80%. Both companies are positioned firmly in the AI-native or AI infrastructure space. In contrast, traditional SaaS companies like HubSpot and Salesforce have experienced significant declines, with HubSpot falling by 51%. The disparity in performance illustrates a 4.7 times difference in valuation multiples between high-growth AI companies and their slower-growing counterparts.
Looking at the successes, Palantir’s revenue growth exemplifies the potential of AI-native companies. After launching its Artificial Intelligence Platform (AIP), the company’s revenue surged by 44% year-over-year by the first half of 2025. In the same period, its free cash flow crossed $1 billion. Meanwhile, ServiceNow achieved remarkable success with its AI-related offerings, boasting $3.41 billion in revenue in Q3 2025, with an annual contract value for AI nearing $500 million. The company aims for $1 billion in AI-specific revenue by 2026, highlighting a growing trend of deploying AI for complex operational tasks.
On the flip side, companies like HubSpot demonstrate the challenges faced by those dependent on a traditional revenue model. Despite raising revenue guidance for the year, market perceptions regarding AI disruption in small to medium-sized businesses have led to a steep decline in stock price. HubSpot’s Breeze AI initiative, while innovative, raises questions about the sustainability of its seat-based pricing model amidst a landscape where AI can potentially reduce the need for human involvement.
As enterprises navigate this evolving landscape, analysts predict that total AI spending will reach $2 trillion globally by 2026, with a significant portion directed towards infrastructure. The findings of a PwC survey reveal that 88% of U.S. executives plan to increase their AI budgets within the next year, and over 26% intend to boost spending by 26% or more. The urgency for solutions that enhance productivity is compelling businesses across industries to adopt AI technologies.
Ultimately, companies that successfully adapt to these new realities will need to rethink their strategies. Those offering AI-native solutions that solve pressing problems—such as security or data infrastructure—stand to benefit significantly. In contrast, horizontal SaaS providers may find themselves at a disadvantage, particularly if they fail to demonstrate the added value of their AI features. As the window of opportunity narrows, businesses must act swiftly to position themselves within this transformative market.
