A survey of chief information officers by Morgan Stanley found enterprises are expected to increase their software budgets by 3.8% year over year in 2026, with Microsoft (MSFT) remaining the clear leader in market share.
Software budgets were expected to increase by 3.7% in the 2025 survey.
“Within that improving software backdrop, we view Microsoft as the best-positioned platform to continue benefitting from improving spending conditions, with CIOs’ weighted-average growth expectations at +7.3% in 2026,” said Morgan Stanley analysts, led by Keith Weiss, in a Wednesday investor note.
Ninety-two percent of CIOs surveyed intend to use Microsoft’s generative artificial intelligence products over the next 12 months. It was 95% last year.
“Microsoft Azure again screens as CIOs’ preferred public cloud vendor (and is expected to remain so over the next 3 years) with CIOs indicating 53% of application workloads reside in Microsoft Azure today, with expectations remaining durable over the next 3 years – all while the broader pace of public cloud adoption is accelerating, based on our CIO Survey,” Weiss noted.
Microsoft’s relationship with OpenAI also continues to play a role, as 37% of CIOs expect to utilize Azure’s OpenAI services. However, this is a steep drop from the 57% that expected to use the service in the second quarter 2025 survey.
While the results show Microsoft as holding the largest market share of genAI spending by enterprises over the next three years at 34%, Amazon (AMZN) ranks second at 15%, followed by OpenAI (OPENAI) and Salesforce (CRM) with 9% each and Google (GOOG)(GOOGL) with 6%.
Morgan Stanley rates Microsoft as Overweight and a “top pick” with a $650 price target.