AI becomes a foundational enterprise layer

One of the most significant shifts expected in 2026 is the evolution of AI from a supplementary tool into a core enterprise platform. Organisations across the region are moving beyond pilots and proofs of concept towards scaled, production-grade deployments.

“AI is rapidly evolving from a supplementary tool to a foundational enterprise layer,” said Clarke. “We expect continued efforts to be ‘AI fit’, but also a much stronger embrace of AI platforms and tools as core business platforms.”

Crucially, much of this progress will happen out of public view. Rather than consumer-facing applications, Clarke points to agentic AI embedded into specific business processes across government, finance and energy.

“We are starting to see a shift from exploration and experimentation into production and scaled deployments,” he said. “This is already happening across all industries, including government, finance and energy.”

From digital to physical: AI meets IoT

Another defining trend for 2026 is the increasing convergence of AI with the physical world, driven by the internet of things (IoT), robotics and edge computing.

“Artificial intelligence offers powerful reasoning and prediction capabilities but is limited without a connection to the physical world,” said Clarke. “IoT provides that bridge, giving AI the sensors and actuators it needs to see, understand and act in real time.”

The twin forces of AI and cyber security will continue to play a big role across the Middle East in the next year. These really are the biggest issues influencing strategy and spending

Omdia’s enterprise IoT research shows that 34% of organisations already use AI and machine learning in their IoT deployments, while 44% cite it as a priority for the future. This combination is expected to accelerate the adoption of physical AI across industries such as energy, utilities, transport and smart cities.

Underpinning all of this is a wave of capital investment in AI-ready infrastructure. Datacentres are becoming critical national assets as demand for AI compute continues to surge.

“Datacentres built for the AI era are becoming critical infrastructure,” said Clarke. “They are needed to develop, deploy and run the AI workloads that are changing our lives.”

Hyperscalers, telecoms operators and emerging “neocloud” providers are all expanding capacity across the region, intensifying competition to become the dominant AI platform. However, this growth brings new challenges around power consumption, water usage and sustainability – issues that will increasingly influence technology strategy.

Cyber security moves from static defence to adaptive resilience

As AI adoption accelerates, cyber security priorities are shifting just as rapidly. Attackers are already using AI to enhance ransomware and phishing campaigns, raising the stakes for organisations operating critical infrastructure.

“As AI is harnessed by attackers for more adaptive ransomware and phishing campaigns, the stakes have never been higher for security teams,” warned Clarke.

In response, organisations are moving away from static security postures towards adaptive, AI-enabled frameworks. “Firms will leverage unique combinations of machine learning, generative and agentic AI as complementary and foundational capabilities, rather than add-on components,” he said.

At the same time, the convergence of IT and operational technology (OT), combined with the rise of physical AI, is expanding the attack surface. Clarke also highlights a growing human cost: “We see burnout amongst cyber security teams continuing to get worse due to an intensified threat landscape.”

Sovereign AI is emerging as a strategic priority, particularly for governments and critical industries, although definitions remain fluid. “We don’t yet have an industry standard for what ‘sovereign AI’ really represents,” said Clarke. “But we are seeing strategies being influenced by sovereignty concerns, especially where national AI strategies have been outlined.”

These efforts span infrastructure ownership, model development and skills development. However, Clarke cautions that the key risk is pace.

“One of the challenges to watch is whether investments across the region can keep up with what is effectively a global innovation speedrun,” he said. “The key will be speed and adaptability to change.”

Cloud expansion will continue across the Middle East in 2026, but Clarke believes the ultimate winners will be determined less by scale alone and more by ecosystem strength.

“One of the biggest factors in the success of cloud platforms is the channel partner community,” he said. “The better and more profitable the channel and the cloud providers make each other, and help customers be successful, the bigger the role the platform will play.”

As a result, Clarke suggested that regional channel partners will be a key indicator of which cloud platforms emerge as the most influential in 2026.

Which emerging technologies will pay off?

Among emerging technologies, Clarke sees agentic AI and edge computing delivering the most immediate commercial value, particularly in combination with robotics and physical AI. However, he expects benefits to be unevenly distributed. “There will be winners and losers,” he said. “And the big winners will be concentrated in number.”

Digital twins are maturing but remain niche for now, while quantum computing readiness, particularly among telcos, will continue to gain attention without having a material economic impact in 2026.

Finally, the talent landscape is entering a period of uncertainty. While demand for AI, data engineering and cyber security skills remains high, the rise of AI agents could reshape recruitment models.

“One of the big elephants in the room is whether employers will continue the same level of recruitment or explore AI agents more aggressively,” said Clarke. “This equation is not yet answered, but we will see more evidence in 2026.”

As AI agents improve, organisations may shift from hiring full-time staff to orchestrating hybrid teams of humans and machines, a transition that could make entry into the job market harder for new graduates.

Although specific regulatory outcomes remain uncertain, Clarke expects AI and cyber security policy to be closely watched by business leaders. “Previous experience has shown that compliance and governance can be very demanding,” he said.

Governments, meanwhile, will continue to use regulation to mitigate risks while maximising the benefits of AI, particularly where it underpins national infrastructure and economic resilience.

In 2026, the Middle East’s technology agenda will be defined not just by how fast it adopts AI, but by how securely, sustainably and strategically it builds the foundations beneath it.