Artificial intelligence has emerged as the leading driver of new cybersecurity investment even as overall security budgets remain nearly flat, according to the 2026 Security Budget Benchmark Report from IANS and Artico Search.

Security budgets grew an average of 5% in 2026, up slightly from 4% in 2025. However, 45% of organizations reported flat budgets while 10% saw their budgets decrease, increasing pressure on CISOs to prioritize investments that deliver business value.

The report also found a widening divide among organizations. Venture- and private-equity-backed companies and well-funded public firms continued to grow security budgets aggressively while funding new AI-specific tools.

AI for security was the top priority for allocating net-new budget dollars, with 69% of CISOs identifying it as their leading investment area.

At the same time, organizations are increasingly using AI to augment security teams rather than replace them. Ninety-one percent of CISOs expect AI to make their security teams more productive over the next 12 months. Meanwhile, 81% expect AI to create demand for new roles and skills and 69% do not expect AI to reduce existing security headcount.

"AI has changed the cybersecurity investment conversation," said Nick Kakolowski, Senior Research Director at IANS. "Organizations aren't simply buying new AI tools. They're rethinking how security teams operate, where they invest, and how they prepare their workforce for the future. The organizations seeing the greatest momentum are using business interest in AI as a lever to get resourcing for security initiatives that enable AI use."

The report found that organizations with dedicated AI budget lines are investing more aggressively. About 70% of organizations that track AI as a dedicated budget line item or subcategory reported increased AI funding, compared with 42% of organizations where AI is embedded within the security budget and 31% where AI is funded through IT, data or innovation budgets.

Organizations that increased AI security spending by more than 10% in 2026 are also more likely to continue increasing those investments. Among this group, 75% expect another increase of more than 10% during the next budget cycle.

AI security tooling now accounts for 3% of the average security budget. When combined with the rest of the software category, software represents 35% of the overall security budget, putting it two percentage points behind staff and compensation.

The research also found that business and operational risk is playing a larger role in security investment decisions than major industry breaches. Increased business or operational risk was cited by 48% of CISOs with growing budgets as the most common driver of budget increases, while 3% cited a major industry breach as a primary driver.

The shift in spending is also affecting how organizations approach security staffing.

“More AI and automation embedded in security workflows has not led to massive layoffs, but it has led to the repurposing of team members and a change in hiring and resourcing,” said Steve Martano, IANS Faculty and Partner at Artico Search. “CISOs are looking at their team members to find anomalies, elevate relevant threats and make judgment calls that AI systems are not yet equipped to do with incomplete or ambiguous information.”

Looking ahead, 64% of CISOs expect their overall security budgets to increase in 2027, compared with 45% who reported budget increases in 2026. Just 8% anticipate a budget cut next year.

"The role of AI in cybersecurity extends well beyond automation," Martano added. "Organizations that align AI security investments with broader business objectives, establish clear governance, and invest in developing new skills will be better positioned to manage risk while enabling innovation."