Investing.com -- A mid-year survey of chief information officers by Bernstein shows IT budget growth in 2026 is expected to remain strong, matching 2025 levels and approaching the strength seen during the COVID-19 era in 2021. The survey reveals a sharp regional divide in spending expectations between the United States and Europe.

US-based CIOs increased their full-year 2026 spending outlook by 60 basis points, while European CIOs reduced their expectations by 130 basis points. The survey indicates that US strength was driven by a robust first half of the year, though expectations for the second half of 2026 have declined over the past three months. European CIOs showed more optimism for the second half after a weak start to the year.

Cybersecurity, generative AI applications, and platform software remain the top three investment priorities for CIOs. Additional spending is concentrated among hyperscalers, with infrastructure and application software also attracting positive investment. The outlook for application software weakened in this survey, likely due to generative AI applications emerging as a separate category.

Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN) Web Services are expected to capture the largest share of budget growth. ServiceNow (NYSE: NOW) and Salesforce (NYSE: CRM) are the only other software vendors showing modestly positive allocation trends. CIOs do not expect to increase spending on large language model vendors such as OpenAI and Anthropic, suggesting enterprises prefer to access AI through established software platforms rather than building internal capabilities.

Cloud adoption continues to increase, with enterprise strategies becoming more divided between companies moving further into the cloud and those maintaining on-premises environments. Cloud-native adoption accelerated in the survey, and public cloud remains the preferred option for new applications. Hybrid cloud remains the dominant long-term architecture due to concerns about vendor lock-in and the need for flexibility.

Microsoft Azure leads among cloud providers, while AWS maintains broad adoption and Google (NASDAQ: GOOGL) Cloud continues to gain market share. AI remains the primary strategic priority for CIOs and is increasingly affecting work processes across organizations. While AI continues to drive IT budget reallocation, funding pressures have eased as technology budgets expand and business units outside of IT contribute to AI spending.

CIOs increasingly expect AI workloads to be cloud-based and prefer packaged solutions from established software vendors over building in-house applications. Most CIOs do not expect AI to replace enterprise software, reduce long-term IT budgets, or drive a shift from software spending toward hardware investments.

Microsoft remains the clear leader among AI platforms, followed by OpenAI, Google Gemini, Anthropic, and AWS. Application software companies attempting to become strategic AI platforms, including ServiceNow and Salesforce, have yet to establish themselves in this role. Programming and IT operations has become the leading use case, followed by customer service and research and development.