Iran Conflict Impacts Global IT Spending, Cybersecurity and AI Remain Priorities

The ongoing conflict involving Iran, Israel, and the United States is poised to significantly impact global IT spending, according to recent analysis. While overall growth is expected to slow, investments in critical areas like cybersecurity and artificial intelligence (AI) are likely to remain resilient.

Economic Fallout and IT Spending Scenarios

The conflict, which began on February 28, 2026, with attacks by Israel and the US against Iran, has already led to disruptions in the global oil market, with Iran effectively closing the Strait of Hormuz ¹. Analysts at IDC have outlined three potential scenarios for the economic impact and subsequent IT spending.

• Short Conflict (Under Three Months): A temporary spike in oil prices and a modest revision to global IT spending forecasts.
• Moderate Conflict (Ending by Mid-Year): A “significant impact” on the global economy, with oil prices reaching $85 to $95 per barrel. Global IT spending growth is projected to fall from 9.7% to 8.8%, and in the US, from 12.4% to 11.4%.
• Prolonged Conflict (Over Three Months): Oil prices remaining above $100 per barrel for an extended period, leading to a more substantial decline in global IT spending.

Impact on Hardware and Software Investments

In the short term, cuts to IT spending will likely be “targeted” rather than broad, due to the prevalence of capital expenditure (capex) and multi-year subscription contracts. However, if the conflict persists through the summer, businesses may reconsider renewing contracts for 2027, with initial cuts focused on capital spending, such as delaying PC fleet refreshes and project-based IT spending like consulting services ¹. The anticipated decline in PC and smartphone shipments, already forecast to drop by over 10% due to a RAM shortage, is expected to be exacerbated.

Cybersecurity: A Resilient Investment

Despite the overall economic uncertainty, cybersecurity is expected to be one of the most resilient areas of IT spending. A rise in cyber activity, including malware, DDoS attacks, phishing campaigns, and attempts to disrupt critical infrastructure, has already been observed ¹. Sectors such as telecommunications, utilities, and financial services are particularly vulnerable, alongside governments and cloud providers. Organizations are accelerating investments in threat intelligence, incident response, security operation centers, disaster recovery, and infrastructure hardening to strengthen their resilience.

AI Budgets Remain Protected

AI is also expected to be largely immune to sweeping IT budget cuts, as it remains a strategic investment priority globally. Organizations are likely to protect AI investments due to their close ties to long-term competitiveness and productivity gains ¹.

Regional Impact: Middle East and Africa

In the Middle East and Africa (MEA) region, IT spending growth is projected to fall from 4.9% to 3.7%, primarily driven by a decrease in consumer spending. Enterprise IT spending is expected to be more resilient. A conflict contained to under three months could see a partial recovery in the second half of 2026, while a longer conflict will likely extend decision cycles and lead to project scale-downs or cancellations.

Cloud Computing and Geographical Risk

The conflict is prompting a reassessment of cloud computing strategies. With major hyperscale regions now operating within an active conflict zone, multi-availability-zone architecture is becoming the minimum acceptable standard, and multi-region deployment is emerging as the default design for mission-critical workloads. Resiliency is no longer just a compliance issue but a board-level concern tied to operational continuity ¹.

The conflict’s impact on ongoing hyperscaler investments in the region, particularly following targeted attacks on US-owned data center providers, remains an open question. While the structural advantages of the Gulf states – low-cost energy and access to technology and capital – still exist, increased geographical risk could influence the timing and scale of future projects.