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2Q26 CIO Survey: IT budget support has improved, but winners are still selective (Morgan Stanley)

2026-07-17·ima-daily5min-0717-36-1df38343e1
Street Signal | 2Q26 CIO Survey: IT budget support has improved, but winners are still selective (Morgan Stanley)

Morgan Stanley's annual CIO survey shows that IT budget growth expectations in 2026 have increased to 3.8% month-on-month, and the one-year budget revision upside-to-downside ratio has reached 1.2x, which is the first time since 1Q24 that it has been >1x.

Although the budget environment is improving, the flow of funds is very selective: software is growing the fastest, security software is the most defensive, and although AI is the top priority, its defensiveness is declining month-on-month.

That means the overall environment for enterprise IT spending is improving modestly, but not all tech stocks will benefit. The market may have corrected its over-optimism about AI, while structural demand for security and software remains positive. The survey pointed out that Microsoft and security software are the clear beneficiaries.

One-sentence conclusion: Enterprise IT spending is entering a healthier expansion cycle, but CIO wallets are "picky". Only software and security are clear winners, and AI investments are becoming more pragmatic.

Positive/negative: Positive for Microsoft (MSFT) and security software vendors (such as CrowdStrike, Fortinet); negative for general software companies that lack a clear path to monetize AI. The downward revision of some AI-related expectations may be priced in, but the structural benefits in the security and software fields may not yet be fully released.

Catalysts:

1) Comments on IT spending in tech giants’ earnings reports;

2) Follow-up data on corporate security budgets and software purchases.

Full text

2Q26 CIO Survey: IT budget support has improved, but winners are still selective (Morgan Stanley)

Morgan Stanley's annual CIO survey shows that IT budget growth expectations in 2026 have increased to 3.8% month-on-month, and the one-year budget revision upside-to-downside ratio has reached 1.2x, which is the first time since 1Q24 that it has been >1x.

Morgan Stanley's annual CIO survey shows that IT budget growth expectations in 2026 have increased to 3.8% month-on-month, and the one-year budget revision upside-to-downside ratio has reached 1.2x, which is the first time since 1Q24 that it has been >1x. Although the budget environment is improving, the flow of funds is very selective: software is growing the fastest, security software is the most defensive, and although AI is the top priority, its defensiveness is declining month-on-month. That means the overall environment for enterprise IT spending is improving modestly, but not all tech stocks will benefit. The market may have corrected its over-optimism about AI, while structural demand for security and software remains positive. The survey pointed out that Microsoft and security software are the clear beneficiaries. One-sentence conclusion: Enterprise IT spending is entering a healthier expansion cycle, but CIO wallets are "picky". Only software and security are clear winners, and AI investments are becoming more pragmatic. Positive/negative: Positive for Microsoft (MSFT) and security software vendors (such as CrowdStrike, Fortinet); negative for general software companies that lack a clear path to monetize AI. The downward revision of some AI-related expectations may be priced in, but the structural benefits in the security and software fields may not yet be fully released. Catalysts: 1) Comments on IT spending in tech giants’ earnings reports; 2) Follow-up data on corporate security budgets and software purchases.

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