Agentic AI is expected to dominate IT budgets over the next five years, being set to capture over a quarter (26%) of worldwide IT spending, according to new research from market intelligence firm IDC.

In its latest AI market forecast, IDC said that the unprecedented surge in agentic AI spending signals a transformation within enterprise IT budgets, with year-over-year spending between 2025 and 2029 predicted to grow by 32%.

If sustained, this investment, driven by the growth of agentic AI-enabled applications and systems to manage agentic fleets, will reach $1.3 trillion (£960.7m) by 2030.

Added to that, anticipated growth in platform solutions that enable businesses to build, manage, and operate their agents more securely and efficiently will bolster investment strategies led by products and services based on an agentic AI foundation.

The IDC report predicts that, through 2029, service providers will account for 80% of infrastructure spend in support of massive increases in agentic workloads. These changes could amount to a 10x increase in the number and complexity of 3rd party and custom-built AI agents used by enterprises in the next five years.

Meanwhile, spending on AI-enabled applications is expected to increase faster than any segment, triggering major competitive shifts in the software industry. Services providers are expected to be the most profoundly affected by this shift as enterprises supercharge spending on agentic AI, further transforming IT business services.

IDC said that these investments, and the evolution of related products, will determine the success or failure of businesses and the tech leaders who put them in place. For this reason, the research firm said that informed leadership will be critical to success over the next several years.

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“An important takeaway from this forecast is the clear alignment between the growth in [AI] spending and IT leaders’ trust that effective use of AI can boost future business success,” said Rick Villars, group vice president for Worldwide Research at IDC. 

“Application and services providers that are behind in putting AI into their products and not extending them with agents are risking market share losses to companies that made the decision to put AI at the centre of their product development roadmap.”

Coinciding with this growth in AI spending is a massive increase in the amount of underlying compute capacity required to support the growth of AI agents. In the short term, IDC’s report said this will require significant and complex build-out from infrastructure providers, expected to be led by cloud providers.

Long term, the focus on AI will likely divert funding from other areas of the tech stack. Whether from an enterprise or a service provider, spending on IT, such as servers and storage, which are not related to AI, will be driven by efficiency and consolidation, limiting growth.