Gartner released its updated worldwide AI spending forecast last week. And per their latest data, AI software spend is … breathtaking:
AI Software spending is growing to $453 billion in 2026. Up 60% YoY. And on pace for $638 billion in 2027.
That’s the biggest single-year jump in B2B software spending we’ve ever seen.
It’s larger than the entire global SaaS market was in 2022
And Gartner is forecasting another 41% growth in 2027, taking AI Software to $638B. By the end of next year, AI Software alone will be a category bigger than every existing B2B software category combined was just a few years ago.
Tough Love: If You Aren’t Growing at These Rates, You’re Losing Budget Share
Now for the Tough Love.
If AI Software is growing 60% in 2026 and your software company is growing 30%, you are not having a good year. You are losing budget share.
The same math applies in 2027. If the category grows 41% and you grow 25%, your slice of the AI software wallet is shrinking. CIOs are spending more on AI software than ever, but a larger share of that spend is going to your competitors.
The new bar is the category growth rate. And the category growth rate is 60% in 2026 and 41% in 2027.
This applies at the segment level too, and it’s even harsher. AI Cybersecurity is growing 98% in 2026. If you’re a cyber vendor at 50%, you’re getting outflanked. AI Models 110%. AI Data 278%. The faster the segment, the more brutal the relative position for any sub-category grower.
The companies that win the next two years are the ones that grow at or above the category rate. Everyone else is technically growing but practically losing.
A few practical takeaways:
1. The AI Software TAM is far bigger than the SaaS TAM ever was. $453B in 2026, $638B in 2027. This is the largest software spend cycle in the history of B2B.
2. The 60% growth rate is like nothing we’ve ever seen before. This is a once-in-a-career tailwind for anyone building in the right segment.
3. But almost everything else is getting cut / rationalized. OT spend overall isn’t growing 60%. It can’t. So you’re either grabbing AI budget or you are fighting for a piece of a shrinking pie.
4. The vendors who win will be the ones who help CIOs prove ROI to their boards. This is a customer success problem disguised as a product problem. The vendors with the best deployment playbooks are going to take the market.
5. 2027 is going to be even bigger. $638B in software spending, with enterprises finally flexing. If you’re raising a Series A or B right now, you’re raising into the largest software market expansion in history.
