Morgan Stanley survey shows Microsoft and security software winning IT budget race

Industry
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Summary · why it matters

Morgan Stanley's second-quarter 2026 CIO survey found IT budget growth expectations for the year ticked higher to 3.8%, with Microsoft and the security software category emerging as the clearest beneficiaries. The survey, fielded between May 8 and June 8, showed CIOs expect 2026 IT budget growth to accelerate to 3.8% from 3.7% in 2025, a 14 basis point year-over-year improvement, though still below the 2010-2019 average of 4.1%. Software remained the fastest-growing industry within technology, with CIOs expecting 4.1% growth in 2026, up 29 basis points from 2025, while Communications, Hardware and Services are all expected to decelerate. Morgan Stanley said the one-year up-to-down ratio for potential IT budget revisions improved to 1.2x from 0.8x in the first quarter, marking the first reading above 1.0x since the first quarter of 2024. AI and machine learning remains the top CIO priority at 18.0%, followed by security software at 11.3% and digital transformation at 10.0%, though AI and machine learning's net defensibility fell to 4% from 10% quarter-over-quarter, suggesting CIOs are becoming more discerning around which AI initiatives are truly protected. Morgan Stanley said the range of winners likely remains relatively narrow, with Microsoft again screening as the clearest public beneficiary across incremental generative AI spend, agentic automation and enterprise distribution, followed by large language model providers, then Amazon, Salesforce and Google, while security screens as the cleanest category-level winner given its priority, defensibility, and accelerating spend outlook.

Impact on stocks 4

Artificial Intelligence▲ · 4 stocks
Microsoft Corporation
MSFT
▲ PositiveDemandrelevance

CIO survey shows Microsoft as the clearest public beneficiary across AI spend, agentic automation, and enterprise distribution.

Amazon.com Inc
AMZN
▲ PositiveDemandrelevance

CIO survey shows Amazon as a beneficiary of AI spend and enterprise distribution.

Salesforce.com Inc
CRM
▲ PositiveDemandrelevance

CIO survey shows Salesforce as a beneficiary of AI spend and enterprise distribution.

Alphabet Inc Class C
GOOG
▲ PositiveDemandrelevance

CIO survey shows Google as a beneficiary of AI spend and enterprise distribution.

Theme Impact 5

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