Investing.com -- A Morgan Stanley survey of chief information officers points to a marginally better outlook for technology spending in 2026, though the overall picture remains cautious and increasingly uneven across categories.

Analyst Keith Weiss said in a note on Thursday that CIOs indicated spending intentions to accelerate slightly from 3.6% growth in 2025 to 3.7% in 2026.

However, Weiss noted that "budget trends still look increasingly K-shaped," with software driving the improvement while hardware, communications and services are all expected to decelerate year-on-year.

Software budgets are forecast to grow 4.1% in 2026, while hardware is seen growing just 1.5%.

Regionally, the U.S. continues to outpace Europe, with U.S. IT spending growth expectations of 3.9% versus 3.0% for the E.U. U.S. expectations were revised up 34 basis points quarter-on-quarter, while European CIOs trimmed their outlook by 5 basis points, pointing to a widening divergence.

Sentiment indicators are said to remain mixed. Weiss said the one-year up-to-down ratio improved to 0.8x from 0.5x in the fourth quarter of 2025, but still reflects a net cautious stance, with 30% of CIOs expecting budget decreases against 24% expecting increases.

On artificial intelligence, Morgan Stanley found that AI/ML has risen further up the CIO priority list, cited by 17.7% of respondents as a top priority, well ahead of the second-ranked category of security at 10.7%.

Hyperscalers are emerging as the early winners of AI wallet share, with Microsoft and Amazon ranked as the top two beneficiaries of incremental IT budget share on both one- and three-year views.