Microsoft, Security Software Lead in CIO Spending Priorities, Morgan Stanley Survey Finds

Chief Information Officers are slightly increasing their IT spending forecasts for 2026, with a narrow focus on artificial intelligence and cybersecurity, according to a new survey from Morgan Stanley. The report identifies Microsoft and the security software sector as the clearest beneficiaries of current enterprise spending priorities.

IT Budgets Show Modest Growth

The second-quarter survey, conducted between May 8 and June 8, found that CIOs expect IT budget growth to reach 3.8% in 2026. This marks a modest acceleration from 3.7% growth in 2025 and a 14 basis point year-over-year improvement, though it remains below the 2010-2019 average of 4.1%.

In a positive sign for future spending, Morgan Stanley noted the one-year ratio of potential upward-to-downward budget revisions improved to 1.2x from 0.8x in the first quarter. This is the first reading above 1.0x since the first quarter of 2024, suggesting a more favorable spending environment.

AI and Security Dominate Priorities

AI and machine learning remain the top priority for CIOs at 18.0%, followed by security software (11.3%) and digital transformation (10.0%). However, Morgan Stanley analyst Sanjit Singh observed that CIOs are becoming more selective about AI investments, as the category's "net defensibility" fell to 4% from 10% in the previous quarter.

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Security software emerged as the "cleanest category-level winner" in the survey. The report cited its high priority, budget defensibility, and an accelerating spending outlook as key drivers for the sector's strength.

Microsoft Emerges as Top Vendor

The survey indicates that the benefits of this focused spending are likely concentrated among a few key players. Microsoft was named the "clearest public beneficiary," positioned to gain from incremental generative AI spending, automation, and its extensive enterprise distribution network.

Other companies poised to benefit include large language model (LLM) providers, followed by Amazon, Salesforce, and Google. Overall, software remains the fastest-growing technology segment, with CIOs anticipating 4.1% growth in 2026, while spending on Communications, Hardware, and Services is expected to decelerate.