By 2026, the Middle East's technology market will be driven by the convergence of artificial intelligence (AI), cybersecurity and large-scale infrastructure investment amid strong, albeit uneven, regional growth.
According to Omdia, global technology spending is expected to grow 10.2% year-on-year in 2026, surpassing the US$6 trillion mark. While the Middle East is expected to see a slightly slower growth rate of 7.94%, it will still push the regional market to US$174.9 billion, highlighting its strategic importance.
“The twin forces of artificial intelligence and cybersecurity will continue to play a big role in the Middle East next year,” said Trevor Clarke, chief analyst at Omdia. “Those are really the biggest issues impacting strategy and spending. They're both trends in their own right, but they're also deeply integrated with all the other ways we're using technology.”
AI becomes enterprise foundational
One of the most significant changes expected in 2026 will be the transformation of AI from an optional tool to a core enterprise platform. Organizations across the region are moving from pilots and proof of concept to large-scale production-grade deployments.
“AI is developing rapidly “From a value-added tool to a foundational enterprise level,” Clark said. “We expect continued efforts to address AI demands, as well as a much greater use of AI platforms and tools as core business platforms.”
It's important to note that much of this progress will happen outside the public eye. Instead of consumer-facing applications, Clark points to agent-based AI embedded in specific business processes in government, finance and energy.
“We are starting to see a shift from exploration and experimentation to production and large-scale deployment,” he said. “This is already happening across all industries, including government, finance and energy.”
From digital to physical: artificial intelligence and the Internet of things
“Artificial intelligence offers powerful reasoning and prediction capabilities, but its capabilities are limited without a connection to the physical world,” Clark said. “The Internet of Things provides this bridge by providing AI with the sensors and actuators it needs to see, understand and act in real time.”
The twin forces of artificial intelligence and cybersecurity will continue to play a big role in the Middle East next year. These are truly the biggest challenges impacting strategy and costs.
Trevor Clark, Omdia
Enterprise IoT research from Omdia shows that 34% of organizations are already using AI and machine learning in their IoT deployments, and 44% cite it as a priority for the future. This combination is expected to accelerate the adoption of physical AI in industries such as energy, utilities, transportation and smart cities.
Underpinning all of this is a wave of capital investment in AI-ready infrastructure. Data centers are becoming a critical national asset as the demand for artificial intelligence computing continues to grow.
“Data centers built for the AI era are becoming critical infrastructure,” Clark said. “They are essential to developing, deploying and running the AI workloads that change our lives.”
HyperscalersTelecom operators and new neo-cloud providers are ramping up capacity across the region, intensifying competition to become the dominant artificial intelligence platform. However, this growth brings new challenges related to energy consumption, water use and sustainability – issues that will increasingly influence technology strategy.
Cybersecurity moves from static defense to adaptive resilience
“As attackers use AI for more adaptive ransomware and phishing campaigns, the stakes for security teams have never been higher,” Clark warned.
In response, organizations are moving away from static security measures towards adaptive, AI-enabled platforms. “Firms will use unique combinations of machine learning, generative and agent-based AI as complementary and foundational capabilities rather than add-ons,” he said.
At the same time, the convergence of IT and operational technologies (OT), coupled with the rise of physical AI, is expanding the attack surface. Clarke also highlights the growing loss of life: “We see burnout among cybersecurity teams continues to deteriorate due to an intensifying threat landscape.”
Sovereign AI is becoming a strategic priority, especially for governments and mission-critical industries, although definitions remain vague. “We don’t yet have an industry standard for what ‘sovereign AI’ actually is,” Clark said. “But we are seeing strategies influenced by sovereignty issues, particularly where national AI strategies have been outlined.”
These efforts span infrastructure ownership, model development, and skill development. However, Clarke warns that the key risk is pace.
“One of the issues to watch is whether investment across the region can keep up with what is effectively a global acceleration in innovation,” he said. “Speed and the ability to adapt to change will be key.”
“One of the most important factors for the success of cloud platforms is the community of trading partners,” he said. “The better and more profitable the channel and cloud providers make each other and help customers succeed, the greater the role the platform will play.”
As a result, Clark suggested that regional trading partners will be a key indicator of which cloud platforms will become most influential in 2026.
What new technologies will pay off?
Among emerging technologies, Clark believes agent-based AI and edge computing will deliver the greatest commercial value, especially when combined with robotics and physical AI. However, he expects the benefits to be unevenly distributed. “There will be winners and losers,” he said. “And the big winners will be concentrated in large numbers.”
Digital twins are maturing, but still remain niche, while quantum computing Willingness, especially among telecommunications companies, will continue to attract attention without having a significant economic impact in 2026.
Finally, the talent landscape is entering a period of uncertainty. While demand for artificial intelligence, data science and cybersecurity skills remains high, the emergence of AI agents could change recruitment patterns.
“One of the biggest questions is whether employers will continue with the same level of hiring or explore AI agents more aggressively,” Clark said. “This equation has no answer yet, but we will see more evidence in 2026.”
As AI agents improve, organizations may shift from hiring in-house staff to creating hybrid teams of humans and machines, a shift that could make it difficult for new graduates to enter the job market.
While the specific regulatory outcomes remain uncertain, Clark expects business leaders to keep a close eye on AI and cybersecurity policies. “Previous experience has shown that compliance and governance can be very demanding,” he said.
In the meantime, governments will continue to use regulation to mitigate risks while maximizing the benefits of AI, especially where it supports national infrastructure and economic resilience.
In 2026, the Middle East's technology agenda will be determined not only by how quickly AI is adopted, but also by how securely, sustainably and strategically the foundations behind it are laid.
