Good morning. When research and advisory firm Gartner released its latest forecast last month, it projected that global IT spending is expected to reach $6.37 trillion in 2026, up 14.2% from 2025.

Such growth reflects the historic level of spending on AI infrastructure across the board. But if you dig a little deeper on the enterprise IT spending side, a more mixed picture emerges.

“Despite the strong growth in spending, this is not a ‘rising tide lifts all boats’ market trend,” Gartner Chief Forecaster John-David Lovelock said about the report. “Technology budgets are being strained by inflation, supply shortages, rising hardware and memory costs, AI funding initiatives and shifting priorities.”

Indeed, tech leaders already have begun sounding the alarm on rising AI token costs, and many are well past the pilot phase of AI, where initiatives were funded for the sake of experimentation.

To make better sense of the numbers, I asked chief information officers what they thought of Gartner’s IT spending forecast, and how their own AI and tech budgets are shaping up. 

Mike Trkay, CIO and chief customer officer of analytics software company FICO, said that while Gartner’s projection appears expansive, overall enterprise budgets remain tightly constrained.

“Organizations are making difficult trade-offs,” Trkay told me. “IT leaders are actively cutting costs in traditional services and routine hardware refreshes to fund the massive processing requirements of AI, particularly infrastructure and data foundation work.” 

When it comes to tracking AI spending on the corporate budget, Trkay said the technology is no longer a separate line item. Instead, it is woven into multiple lines across the IT budget.

Yet the bigger problem is what Trkay described as an “AI ROI paradox.” Even while AI budgets are being funded aggressively, leaders can’t yet draw a straight line to the bottom line, meaning ROI hasn’t caught up to investment, he said.

The issue of measuring AI’s ROI has been a persistent challenge for IT leaders, even nearly four years into the AI boom. Now, as AI agents become more widely adopted, it remains a matter of debate whether the technology’s ROI can be clearly calculated.

To Mike Kempe, CIO of audit and consulting firm Grant Thornton, the Gartner report comes as no surprise—but with one caveat.

“It’s clear that technology spending is still growing, but I don’t think companies are spending more simply for the sake of spending more,” Kempe told me. “The conversations I’m having with clients, fellow CIOs, boards and others is much less about whether they should invest in AI and much more about where they’ll get the biggest return.”

So what exactly are those areas? They’re certainly not flashy, according to Kempe, and typically involve projects that automate manual processes or help people make decisions faster in departments like finance, risk, operations and client service. 

“I strongly believe that we are moving beyond the phase where companies measure success by how much they spend on AI. The focus now is on how quickly they can turn those investments into real business value,” Kempe added.

Sastry Durvasula, chief operating officer of TIAA, said the financial services organization is directing resources toward the areas where Gartner shows growth accelerating, including AI-optimized infrastructure, cloud platforms and intelligent software.

“We are four years into our AI journey and well past experimentation,” Durvasula told me. “We have deployed dozens of production use cases across operations, client engagement, and shared services.”

Durvasula said TIAA is primarily focused on AI-powered fraud prevention and cybersecurity, and redesigning how employees get work done with AI across the enterprise.

“Gartner’s own analysts note this is not a rising tide that lifts all boats,” Durvasula added. “The organizations that will lead are those with mission alignment, governance discipline and the operational focus to move from pilots to measurable outcomes.”

Are you feeling the budgetary pressures that Gartner identifies? Send your feedback to me at belle.lin@wsj.com (if you’re reading this in your inbox, you can just hit reply).

Nvidia announced an expanded partnership with Amazon Web Services, Amazon’s cloud unit, on Wednesday, The Wall Street Journal reported.

AWS is deploying an additional two million GPUs starting this quarter through the second of fiscal 2029, according to Nvidia CFO Colette Kress, speaking on a conference call after the chip giant’s earnings report that afternoon.

The companies also plan to deepen their work together across AI factories, CPUs, networking, open models, data processing and robotics, they said in a press release.

Elsewhere in Nvidia news:

• Blowout second-quarter results sent the chip maker’s shares surging 8.7%, their steepest one-day climb since April 2025, adding $442 billion to the company’s market value, WSJ reports.

• Nvidia executives defended the company’s use of financial guarantees and equity investments to help customers buy its AI chips. The chip maker argued that its sales “flywheel” is more than robust enough to fund the financial support it gives frontier AI labs and data-center developers, WSJ reports.

• The chip company paused some deals in a new financing initiative that offered credit support to AI cloud providers in exchange for a share of revenue, WSJ reports. Some Nvidia employees expressed concern to current and potential customers that the program could draw antitrust scrutiny, and said there are sensitivities around the extent to which the chip giant can dictate how their customers do business.

• A federal judge ruled late Thursday that the Trump administration violated Anthropic’s First Amendment rights by blacklisting the AI company as a supply-chain risk, The Wall Street Journal reports.

• South Korea plans to give its entire population free access to AI services, the first major state-led offering treating the technology akin to a public utility. The program seeks to connect more South Koreans to homegrown AI chatbots with the goal of advancing the country’s push for AI sovereignty, WSJ reports.

• Workday reported a higher profit and rising revenue in the fiscal second quarter, driven by growing adoption of its AI agents, WSJ reports.

• A wave of cyberattacks driven by AI is coming, and companies have a narrow window to defend themselves. That was the message of a letter published on Thursday by OpenAI and more than 100 major technology companies and others, the New York Times reports. Signatories included Google, Microsoft and Anthropic, as well as cybersecurity and financial firms such as CrowdStrike.

• WSJ features columnist Jamie Waters wrote about his surprise when an uninvited guest crashed his family vacation: his mom’s AI chatbot. Or, as his mom calls the bot, “The nice man who answers all my questions.”

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