Gartner: Software Hits $1.68T by 2027, But AI Models Drive 117% Growth

Gartner’s latest IT spending forecast reveals a stark reality for B2B software vendors: while the total software market is projected to grow 14.6% to $1.68 trillion by 2027, this average masks a severe bifurcation. According to SaaStr, the growth is being driven almost entirely by AI models, which are forecast to grow 117% in 2026, and AI application development platforms, which are seeing 39% growth. For sales leaders, this means the "standard" B2B app market is growing well below the headline number, squeezed by price increases on incumbent tools and the shift toward usage-based AI costs.

What happened

Gartner released its IT spending forecast on October 21, predicting worldwide IT spending will reach $7.35 trillion in 2027, a 15% increase. Within this, the software segment is expected to add $215 billion in one year, reaching a total of $1.68 trillion. SaaStr notes that this 14.6% growth rate is an aggregate that blends vastly different categories. Specifically, Gartner raised its 2026 growth forecast for GenAI models from 110% to 117%, and for AI application development platforms from 28% to 39%.

Crucially, SaaStr points out that a significant portion of this growth is not volume-based but price-based. Gartner’s analyst Lovelock stated that "the cost of software is going up... thanks to GenAI," indicating that many enterprises are paying more for the same seats or adding AI SKUs to existing systems of record. Meanwhile, standard B2B applications are growing well below the 14.6% average. Gartner also predicts that by 2029, four in five new apps will be built for use under a year, driven by employees using AI platforms to create temporary tools in-house rather than buying external software.

Why it matters for sales teams

If you sell standard B2B software, you are competing in a market where the headline growth is an illusion. The 14.6% figure is inflated by model providers and AI platform developers. For your pipeline, this creates two distinct risks. First, your prospects are facing higher costs for their core systems due to AI add-ons and usage meters, which may tighten their budgets for new, non-AI-specific tools. Second, the rise of AI app dev platforms means your buyers can now build internal solutions in an afternoon. As SaaStr notes, this spend goes to the platform, not your vendor. Your value proposition must shift from "we provide a tool" to "we provide a capability you cannot build internally," or you risk being priced out by the very AI infrastructure your customers are adopting. The era of easy seat expansion is ending; the era of proving ROI against usage-based AI costs is beginning.

What to do this week

1. Audit your pricing model to identify if you are still selling flat seats, and prepare a usage-based or outcome-based alternative to compete with AI platform costs.
2. Update your sales collateral to explicitly address the "build vs. buy" question, highlighting the specific risks and costs of internal AI development that your product mitigates.
3. Review your top 10 accounts to identify which are already adopting AI FinOps, and prepare a conversation starter on how your product integrates with their real-time AI cost monitoring.

Sources

• Gartner Sees Software Growing 14.6% to $1.68 Trillion in 2027: Models at 117%, AI App Platforms at 39%, and Price Increases Doing a Lot of the Work — SaaStr