Infrastructure Spending More Than Doubles in Q3 on Growing AI Momentum, ISG Index™ Finds
Key Highlights
- ➤Combined global market ACV rose 63% to record $52.5 billion in Q3
- ➤IaaS spending surged 115% to $35.5 billion on AI demand
- ➤SaaS spending increased 21% to $5.6 billion, strongest growth in four years
- ➤ISG raised 2026 XaaS growth forecast to 60% from 30%
- ➤Managed services ACV grew 2.1% to record $11.3 billion
Expert Statements
Steve Hall, Chief AI officer and leader of the ISG Index at ISG
“The AI infrastructure boom is still accelerating”
Steve Hall, Chief AI officer and leader of the ISG Index at ISG
“The hyperscalers continue to post strong growth and are committing extraordinary levels of capital to new capacity. While supply is growing, this is definitely a demand-driven market. Providers are continuing to build because enterprise demand for compute, storage and AI capacity remains exceptionally strong. The implication is the infrastructure cycle still has room to run. We are not yet seeing a clear peak.”
Steve Hall, Chief AI officer and leader of the ISG Index at ISG
“The disruption thesis around SaaS is not playing out in the way the broader markets expected. AI is absolutely changing software economics. But what appears to be happening is that software platforms are becoming one of the primary distribution layers for enterprise AI. The companies that already own workflows, data and user relationships are embedding AI directly into those environments. They will be the winners in this market.”
Steve Hall, Chief AI officer and leader of the ISG Index at ISG
“The combination of lower award volumes and record ACV suggests enterprises are becoming more selective, concentrating their spending on fewer, larger strategic commitments”
Steve Hall, Chief AI officer and leader of the ISG Index at ISG
“Right now, much of the incremental investment is flowing into infrastructure, platforms and software rather than traditional outsourcing and managed-services contracts. That creates a real challenge for service providers. They are participating in the broader AI transformation, but they have not yet captured the same growth economics as the technology providers.”
Steve Hall, Chief AI officer and leader of the ISG Index at ISG
“The IaaS market has become difficult to forecast”
Steve Hall, Chief AI officer and leader of the ISG Index at ISG
“The scale of hyperscaler investment, capacity commitments and circular financing across the AI ecosystem is creating more volatility and distortion in the traditional demand signals. So, while we are moving our XaaS forecast up substantially, we think the risk to the IaaS outlook is to the upside.”
Steve Hall, Chief AI officer and leader of the ISG Index at ISG
“increasingly concentrated”
Steve Hall, Chief AI officer and leader of the ISG Index at ISG
“AI is changing the shape of the market, the pace of growth across segments, and the economics underneath it”
Infrastructure Spending More Than Doubles in Q3 on Growing AI Momentum, ISG Index™ Finds
Combined market ACV up 63%—highest growth rate ever—to record $52.5 billion
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