A Citi survey of IT decision makers in Q2 2026 shows Microsoft leading as the vendor CIOs plan to increase AI spending with, while overall forward IT budget growth expectations rose to 3.3% from 2.6% the prior quarter. Notably, half of CIOs expect AI to drive headcount reduction in the next six to 12 months, reflecting confidence that the technology can replace existing roles.
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Citi's Q2 2026 survey of 100 IT decision makers found Microsoft is the top vendor CIOs plan to increase AI spending with, followed by Amazon and Google. Forward IT budget growth expectations rose to 3.3% from 2.6% in the prior quarter, with EMEA budgets accelerating 0.8 percentage points to 3.9% and U.S. budgets rising 0.6 percentage points to 3.0%. Half of CIOs surveyed expect AI to drive headcount reduction over the next six to 12 months, up from 47% previously.
Why it matters
Businesses are shifting investment focus toward AI despite economic uncertainty. AI now represents about 6.5% of IT budgets, with 69% of funding coming from new or additional money—down from 73% previously—suggesting a maturing budget reallocation. The finding that 50% of CIOs expect AI-driven job cuts signals that IT leaders view AI not just as a tool to add capability, but as a potential replacement for existing roles.
What to watch
Data analytics and AI remained the top investment priority for respondents and gained further share. Web security jumped into the top-priority group, which Citi attributed to a surge in malicious and legitimate agentic and bot internet traffic alongside expanded API surfaces. On the flip side, Cisco, Dell, IBM, and ServiceNow were the most-cited vendors facing spending cuts.
Citi's Q2 2026 CIO survey reveals a marked acceleration in IT budget growth after a softer Q1, signaling renewed confidence in technology investment. The overall forward IT budget growth expectation of 3.3%—0.8 percentage points above the seven-year historical average—suggests IT leaders view the macroeconomic backdrop as improving. Microsoft's position as the top vendor for planned AI spending increases reflects both its dominance in cloud infrastructure and its integrated AI offerings; the presence of Amazon and Google in the top three underscores that CIOs are hedging across major cloud providers rather than consolidating spend.
The data reveals a portfolio shift within IT budgets: data analytics and AI have gained further share of investment priorities, while web security has abruptly entered the top priority cohort. This pivot away from traditional infrastructure vendors (Cisco, Dell, IBM, ServiceNow) toward cloud and AI leaders may signal that CIOs view the future of IT as cloud-native and AI-augmented, rather than on-premises. At the same time, AI's relatively small share of total IT budgets (6.5%) and the slowdown in new-money ratios (from 73% to 69%) hint that organizations are beginning to fund AI through reallocation and reprioritization rather than pure incremental spending—a sign the category may be maturing from a speculative investment into operational reality.
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