Growth in data centre systems is expected to be less than half of that which it was last year, according to an analysis by Goodbody Stockbrokers.
The group’s tech sector outlook for 2026, which is globally focused, has predicted the sector will grow by 19 per cent this year, but it should be noted that level would be down on the “extremely strong demand” seen in 2025, when growth reached 46.8 per cent.
Data centres and artificial intelligence (AI) were “another big component” of the key deals in 2025 as the AI wave “continued to permeate”.
“Demand for data centre capacity is significant,” the report said. “With demand for renting capacity scaling given the shortage of new build, this is driving acquisition appetite in the area, particularly from hyper-scalers.”
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Core information technology (IT) spending is expected to rise by 12.5 per cent to $3.9 trillion (€3.3 trillion), which includes an incremental $93 billion in data centre spend.
It also includes an additional $431.7 billion “potentially linked” to software upgrades relation to generative AI (GenAI). Analysing the major hyperscalers, the direction of travel for AI capital expenditure “continues to rise universally”, the report said.
Among the top five – namely Amazon, Meta, Google, Microsoft and Oracle – an accumulated spend of $241 billion in AI capital expenditure in 2024 is set to rise to more than $620 billion by the end of 2028, marking a four-year compound annual growth rate of just over 26 per cent.
“Supply is not currently close to matching demand levels at this stage,” the report said.
Overall, the technology sector has been a “prominent driver” of global funding and deal activity throughout 2025. “The industry is going through material transformation as GenAI models continue to iterate at breakneck speed,” the report said.
“To fuel the advancing maturity of these models, their data and energy requirements as companies continue to adopt and deploy their plans, this necessitates a huge AI capital expenditure program to be built out by the end of this decade of more than $4 trillion globally.”
Goodbody said it believes the traditional areas of tech such as enterprise software will “continue to grow and remain attractive targets”.
The “higher impact areas” for funding are likely to be cloud, AI, cyber, and data centres as “business models evolve” and GenAI “deploys at scale into the global economy”.
“We expect to continue to see incumbents as key acquirers as they look to productise their platforms such as in the cyber industry but we also believe that this will continue to occur at the model layer as the race to monetise these platforms continues given their capital intensive nature,” the report said.
More generally, the group said it was “bullish” on the overall technology sector as it looks to the year ahead.
“Technology spend continues to scale globally,” it noted, pointing out that worldwide IT spending is predicted to reach $6.1 trillion this year, which would represent year-on-year growth of 9.8 per cent.
Goodbody warned of a likely rise in cyberattacks. “As the attack surface widens, the propensity for more sustained cyberattacks increase,” it said.
“Cyber-attacks grew by 21 per cent year-on-year in 2025, and ransomware is set to grow by 40 per cent in 2026 as one of the leading forms of attack types.”
