Morgan Stanley’s Q2 CIO survey shows these names are winning the race

Investing.com -- Morgan Stanley's second-quarter 2026 CIO survey found IT budget growth expectations for the year ticked higher quarter-over-quarter to 3.8%, with Microsoft and the security software category emerging as the clearest beneficiaries, according to analyst Sanjit Singh.

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 1Q24."

Looking at CIO priorities, Morgan Stanley said AI/ML remains the top priority at 18.0%, followed by security software at 11.3% and digital transformation at 10.0%.

However, the firm noted AI/ML'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 GenAI spend, agentic automation and enterprise distribution, followed by LLM providers, then Amazon, Salesforce and Google.

Security, meanwhile, screens as "the cleanest category-level winner given its priority, defensibility, and accelerating spend outlook."

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