Forrester Predicts AI Budget Delays and Neocloud Surge

The fears of a looming AI bubble and a possible burst colours enterprises, as many join in simply to avoid missing out on the next big thing.

Forrester’s 2026 Technology and Security Predictions report suggests that enterprises will defer 25% of their planned AI budgets to 2027 as the hype fails to meet expected returns.

“In 2026, the AI hype period ends as the pressure to deliver real, measurable results from secure AI initiatives intensifies,” says Sharyn Leaver, Chief Research Officer at Forrester. 

“As the era of volatility continues, tech and security leaders will be called upon to recalibrate investments under tighter financial scrutiny and governance while navigating increasingly complex geopolitical and economic risks.

“Forrester’s predictions are designed to help leaders make confident decisions by understanding the forward-looking trends that will shape their industry, function and role in the year ahead.”

Neoclouds to capture US$20 billion as hyperscalers erode

Neoclouds, specialised cloud platforms that use GPUs to support AI and high performance computing, are forecast to enter a strong growth phase.

Providers such as CoreWeave, Lambda, Nebius and Vultr offer scalable, high-performance AI infrastructure and are expected to capitalise on this growth. 

As their capabilities increase, enterprise adoption is expected to triple, resulting in revenue growth that will erode reliance on hyperscalers.

“Every layer of CoreWeave’s platform is designed to help builders move faster," says Michael Intrator, CEO at CoreWeave, as the company unveiled its new AI Object Storage service.

“Today, we’re taking another massive leap with CoreWeave AI Object Storage, an industry-leading fully managed object storage service built specifically for AI workloads.

“The future of AI depends on performance and accessibility, and we’re making both limitless.”

2026: a year of AI failures?

According to the report, a quarter of CIOs will have to step in to recover business-led AI failures in their organisations.

This is attributed to accuracy issues caused by AI and a lag in adopting agentic AIs with the appropriate governance frameworks.

The report also notes that only 15% of AI decision makers have seen an EBITDA increase over the past 12 months.

As a result finance teams are expected to gate spending due to the lack of proven returns, slowing AI adoption and forcing a market correction.

However, Forrester suggests that this will drive down AI service costs, creating opportunities for more strategic buyers.

Hiring dynamics shift as AI reshapes developer roles

The Forrester predictions note that as organisations equip senior developers with AI tooling, many will reduce or pause junior hiring.

This will make it harder to find candidates with architecture-level expertise, slowing recruitment.

HR teams may become overwhelmed as large numbers of candidates equipped with AI will storm HR with applications, making it difficult to find the right talent. 

Forrester advises companies not to avoid hiring junior developers entirely, to look internally for staff with architectural familiarity and to equip HR teams with AI tools of their own.

Quantum security spending rises

As commercial quantum computers are expected to metamorphose into reality, so do the security threats that come from them.

These systems will be able to decode today’s asymmetric cryptography within a decade, if not sooner. 

Meanwhile the support for public key encryption algorithms, RSA and ECC will depreciate by 2030. 

Security teams will therefore need to migrate to quantum-safe systems, prioritising high-impact environments first.

Investments in cryptographic discovery and inventory tooling are expected to rise as organisations prepare. 

The Forrester report suggests that the coming years will test how enterprises balance ambition with measurable outcomes.

While AI investment will not stop, it will become more pragmatic.

Those who focus on governance, cost efficiency and strategic adoption rather than hype are likely to benefit most from the market correction ahead.