What happened
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 March 2026, with both U.S. and EMEA regions accelerating investment.
Why it matters
Data analytics and AI remain the top investment priority and gained further share among IT budgets. AI currently represents about 6.5% of IT budgets overall, with 69% of that funding coming from new or additional money rather than reallocation. Web security also entered the top-priority cohort, reflecting concerns about malicious and bot traffic.
What to watch
50% of CIOs expect AI to drive headcount reduction over the next six to 12 months, up from 47% in the prior survey. The most-cited vendors facing AI spending cuts include Cisco, Dell, IBM and ServiceNow.
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Citi's second-quarter survey captures a notable shift in enterprise technology spending: Microsoft's dominance in AI purchasing reflects both its broad portfolio and CIOs' confidence in its cloud and AI capabilities. The acceleration in forward budget growth—to 3.3% from 2.6% just one quarter earlier, and 0.8 percentage points above the seven-year historical average—signals that AI investment is now pushing overall IT spending upward rather than displacing other priorities.
The finding that 69% of AI funding comes from new or additional budgets (down slightly from 73% previously) shows that enterprises are expanding the IT pie for AI rather than merely shifting existing allocations. This new money reflects the strategic weight CIOs assign to data analytics and AI, which have claimed top investment priority and continue to gain share. At the same time, the rise of web security into the top-priority cohort alongside these core investments reflects a real operational concern: the body attributes this leap to a surge in malicious and bot traffic, suggesting that the proliferation of AI agents and automated systems is creating new security surface area that CIOs cannot ignore.
The headcount expectation—half of CIOs anticipating AI-driven workforce reduction over six to 12 months, up from 47%—captures a tension at the heart of AI adoption: while enterprises are spending more on AI infrastructure and tools, they are also planning for automation to reduce labor costs. Spending cuts at Cisco, Dell, IBM and ServiceNow may signal either CIO skepticism of those vendors' AI offerings or a preference for consolidating purchases around leaders like Microsoft.
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