Forrester: AI, Cloud to Drive 13.3% Growth in Software Infrastructure
Software Is Continuing to See Double-Digit Growth Despite Challenges Like Geopolitical Tensions
Forrester has published a new report, “Global Commercial Software Forecast, 2025 to 2029.” The report reveals that cloud and Artificial Intelligence (AI) will drive infrastructure software growth, reaching a 13.3% compound annual growth rate (CAGR) from 2025–2029, whilst application software will see slower growth of 9.5%.
Despite the geopolitical tensions linked to tariffs, software continues to see double-digit growth rates, with the average software vendor revenue growth in Q1 2025 at 11%. According to Forrester, over the next five years, security, databases, and AI platforms are set to dominate software infrastructure growth, while application software areas like tech operations management, ERP, vertical software, and supply chain management will lead in their category.
This research predicts key software growth trends from 2025 to 2029 and explores how challenging economic conditions in 2025 will compel software firms to adapt strategies, optimise headcount, and focus investments on cloud and generative AI solutions to maintain competitive advantages.
Key highlights of the Forrester report include:
- Cybersecurity will see the fastest growth, with investments in cloud security and identity management leading to a 14.3% CAGR.
- Database software will see a boomdriven by companies like MongoDB (+50% revenue in 2 years) and Snowflake (+75% revenue from 2022-2024).
- Application software is evolving, with tech operations management growing at 12.3%, fueled by advancements in AI agent orchestration tools.
- Strategic shifts in 2025will force software firms to rationalise headcount while intensifying AI innovation to boost productivity, reduce costs, and create new growth opportunities in customer service, marketing, and workflow automation amidst economic challenges.
“Software firms are being reshaped by economic pressures and advancements in AI. While infrastructure growth is accelerating, businesses must rethink strategies to optimise resources, adopt agentic AI solutions, and better manage software spend,” said Linda Ivy-Rosser, VP Research Director at Forrester. “Companies that align their priorities with evolving market trends will secure competitive advantages well into the next decade.”
