The escalation of conflict in the Middle East is reshaping expectations for the global technology economy, according to research firm IDC, which says the transmission of geopolitical shocks into IT spending is clear and measurable.

In a recently-published report, the company said the central question for technology leaders is not whether there will be impacts, but their depth, duration and derivative consequences.

Under its baseline scenario, the firm assumes the conflict remains contained within weeks, with growth and recovery in the second half of the year.

In that case, global IT spending growth in 2026 would remain near 10 per cent, with only modest disruption to enterprise investment plans overall.

In the Middle East and Africa region, where devices account for a larger share of expenditure, growth would track closer to 5 per cent.

However, IDC warned that the risk of a downside scenario is increasing as energy markets react to instability.

A recent oil price spike could mark the beginning of a broader macroeconomic slowdown transmission into technology demand.

If the conflict lasts up to three months, global IT market growth could fall by around one percentage point, while Middle East and Africa expansion would slow to roughly 3 to 4 per cent.

A more prolonged escalation beyond three months would introduce significantly greater downside risk through energy markets and inflation pressures.

Energy prices remain the primary transmission channel into technology spending, with oil volatility quickly feeding into inflation expectations and operating costs.

IDC highlighted that data centres, semiconductor fabrication plants, global logistics networks and advanced manufacturing systems are all energy intensive operations.

Even modest increases in oil and gas prices raise operating expenditure across the digital infrastructure stack.

If elevated prices persist, central banks could delay interest rate normalisation, tightening financing conditions for enterprise IT projects.

The result would not be an abrupt collapse in demand, but a gradual slowdown in discretionary spending and device refresh cycles.

The Middle East and Africa region faces additional risks, particularly if a blockage of the Strait of Hormuz disrupts Gulf oil export volumes.

Such a scenario would constrain revenue gains even if prices rise and increase regional risk perception and uncertainty.

Governments and sovereign wealth funds may respond by scaling back or recalibrating national transformation agendas and large scale projects.

Stronger Gulf economies may sustain digital investment, but elsewhere spending could shift towards mission critical priorities as foreign direct investment softens.

IDC said the conflict also represents a structural shift for the cloud industry, with major hyperscale regions now operating within an active conflict environment for the first time.

This is accelerating the adoption of multi availability zone architecture and making multi region deployment the default for critical workloads.

Resilience is no longer a compliance requirement but a board level operational priority tied to continuity for enterprises and SaaS providers.

In response, sovereign infrastructure initiatives in the Middle East are expected to accelerate as governments push for digital sovereignty and national cloud platforms.

However, IDC warned that the fragility of the region means such strategies will likely require stronger operational resilience and disaster recovery mandates.

These programmes are increasingly being viewed not as modernisation efforts but as tools of strategic autonomy and national security capability.

A prolonged conflict could also create temporary fiscal trade offs between defence spending and digital investment priorities.

Beyond infrastructure, supply chain risks are rising due to the strategic importance of the Strait of Hormuz and Gulf logistics hubs.

Any sustained disruption could increase energy input costs for semiconductor production and data centres while also raising freight and insurance costs.

Semiconductor markets are especially sensitive, with memory supply already tight heading into 2026.

A prolonged conflict could increase demand for advanced chips used in defence systems and autonomous technologies.

In extreme cases, governments could intervene to secure supply, placing upward pressure on DRAM and NAND pricing.

Cybersecurity spending, however, is expected to remain structurally resilient throughout the downturn scenario.

Geopolitical escalation typically increases state sponsored cyber activity targeting energy, finance, telecoms and cloud infrastructure.

As a result, organisations tend to maintain or increase security budgets, expanding detection and response capabilities rather than cutting costs.

Consumer technology spending is more vulnerable, with inflationary pressure already weakening smartphone and device demand in key markets.

Rising input costs and declining consumer confidence could further delay device refresh cycles and weigh on growth.

Artificial intelligence investment sits between resilience and risk, as enterprises balance infrastructure costs and productivity gains.

While rising memory prices and tighter capital conditions may slow some deployments, AI remains central to productivity and efficiency strategies.

Defence analytics, cybersecurity applications and sovereign AI projects in the Gulf may even see accelerated investment momentum.

Compared with previous shocks, IDC said the current IT market is more structurally resilient due to the growth of subscription based models and hyperscale infrastructure.

Under a contained scenario, disruption would remain temporary, but a prolonged escalation could shave around one percentage point from global IT growth.

A six to nine month conflict with oil sustained above 100 dollars a barrel would place stronger pressure on capital markets and project delivery timelines.

IDC said the situation should be viewed as a stress test of the digital economy’s energy dependence and supply chain complexity.

While exposure is highest in the Middle East, second order effects will spread globally through energy costs and pricing pressures.

The firm added that technology tends to demonstrate its value during periods of instability, as organisations prioritise operational resilience and rapid response capability.

Even in downside scenarios, IDC expects three areas to remain structurally prioritised: AI infrastructure, sovereign digital platforms and cybersecurity investment.

The main risk to the sector is not demand collapse but cost driven moderation and selective reprioritisation across enterprise budgets.