For the last three years, the MSP industry has been running on adrenaline and hype.
We’ve been told that AI would solve everything, that massive tool consolidation was inevitable, and that the only way to grow was to sell more stack. It was a period of easy promises and shiny objects.
But Empath co-founder and cybersecurity veteran Wes Spencer says the party is over.
We asked Wes to look at the data, from declining AI model gains to shifting SMB demographics, and give us his forecast for the next year. We expected a list of hot new tools.
Instead, he gave us a warning:
"The era of easy growth via hype is dead. 2026 is the year the bubble bursts, the stack fractures, and the old MSP model finally shrinks. Okay, maybe there's some hyperbole in there, but times are changing."
This isn't doom and gloom, it's a market correction. And for the MSPs willing to sober up and execute, it’s the biggest opportunity in a decade.
If you are analyzing MSP trends for 2026 to build your plan, here are Wes Spencer’s three hard truths you need to know.
Everyone has been mesmerized by the AI hype curve. But here’s the real take: 2026 is the year the AI bubble bursts, and the survivors are the MSPs who treat AI like infrastructure, not inspiration.
The data is already telling the story. Nearly every major AI index shows declining model-over-model gains compared to the explosive growth of 2022–2023. OpenAI, Anthropic, and Meta internal benchmarks all report tapering returns. Despite the overwhelming noise, actual enterprise adoption has stalled at just 14 percent.
Add in skyrocketing cloud costs and an SEC crackdown on unverifiable AI claims, and the writing is on the wall: the magic phase is over.
So what happens next?
MSPs who keep selling "AI-enhanced" anything will fall flat. Clients are tired of paying for buzzwords.
But MSPs who weaponize AI for brutal operational efficiency under the hood will win market share quietly and fast.
This is about using AI to achieve:
This becomes the next arms race: The AI Efficient MSP vs. the AI Loud MSP.
One survives. One burns cash.
MSPs that use AI to become 30–50 percent more productive internally become the new high-margin leaders. Not because they "sell AI," but because they operate like a different species of company.
This is the year AI stops being magic and becomes muscle.
Every year someone predicts, "This is the year MSP tools consolidate."
But Wes’s forecast swings the other direction. 2026 is the year MSPs fragment their stacks, not consolidate them, and accountability becomes the forcing function.
Why? Because the "single pane of glass" promise is hitting a wall.
For years, MSPs bought into the idea that one platform could solve everything. But monolithic platforms are struggling to keep up with rapid threat evolution, and as complexity rises, it's becoming impossible for any single vendor to provide enough value for every unique use case.
More importantly, cyber insurers and regulators are demanding proof. They don't want a list of SKUs; they want evidence packs, proof of control execution, and mapped controls.
So the "one stack" mandate crumbles.
Instead, MSPs will build lean, modular stacks that are radically accountable. Every tool must fight for its life. If it cannot produce evidence, reduce risk, or integrate cleanly to deliver a measurable outcome, it gets cut.
This creates a new maturity curve for the industry:
It’s not about having fewer tools. It’s about having fewer excuses.
This is the big one.
2026 is the year the market finally admits what’s been building for a decade: Co-managed and project based revenue becomes the primary growth engine and old-school fully outsourced MSP services quietly start their first real decline.
Here’s what’s driving it:
The average SMB owner is now 38 to 52 years old. This generation is the most tech-comfortable in history. 63 percent of SMBs report they want more control over their stack, not less. Internal IT hiring is back up 29 percent after a dip in 2023–2024.
Modern SMBs don’t want a “ticket slayer.” They want a growth partner who helps them think.
This creates a massive market reshuffle:
Clients are no longer buying tickets, hours, or SLAs. They are buying AI strategy, data governance, and risk roadmaps.
To survive these shifts, your MSP growth strategy must evolve from commodity service providers to consultancy with delivery muscles. For the first time, the market starts shrinking for the legacy model.
Not disappearing, but shrinking.
If you look at all three of these shifts, AI becoming infrastructure, stacks becoming accountable, and services becoming co-managed, one theme emerges: Operational Maturity.
For the last five years, you could grow an MSP by just being "good enough" and riding the wave of demand.
That era is over.
2026 belongs to the MSPs who treat their business like a professional consultancy, not a repair shop. For the MSPs willing to do the hard work of building a mature operation, the opportunity has never been bigger.
But you cannot build this level of maturity on tribal knowledge and scattered SOPs. To deliver evidence-based security and high-value consulting, your entire team needs to be aligned, trained, and accountable to a single standard.
We created Empath for this reason. It’s not just an MSP-specific training platform, it’s the operating system for your team’s growth. It houses expert-led courses to upskill your staff for tomorrow's landscape, the custom pathways to standardize your service delivery at scale, and the accountability tools to prove you're ready for 2026.
Ready to build the maturity your future demands?
There are two ways to get started:
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