Microsoft (NASDAQ:MSFT) is well positioned to secure a greater portion of incremental generative AI investment and expanding enterprise software budgets in 2026, according to Morgan Stanley’s latest fourth-quarter 2025 CIO Survey.
Morgan Stanley analyst Keith Weiss said Microsoft “remains in pole position to garner increasing IT Wallet share as GenAI adoption ramps and cloud migrations pick up,” reiterating the bank’s Overweight rating on the stock and naming it a Top Pick.
Based on the survey, chief information officers expect overall software spending to grow slightly faster in 2026, with budgets rising 3.8% compared with 3.7% in 2025.
Against this backdrop, Morgan Stanley said Microsoft is the “#1 share gainer of IT wallet as a result of shift to the cloud on both a 1-year and 3-year view.”
The survey found that 92% of CIOs anticipate using Microsoft’s generative AI offerings over the next year, broadly unchanged from 95% in the prior survey.
Azure continues to stand out among cloud platforms, with CIOs indicating that 53% of application workloads are already hosted on Azure. Morgan Stanley said the survey suggests this leadership position is likely to be maintained over the next three years.
Weiss pointed to Azure AI as a “key priority,” noting that 37% of CIOs expect to deploy Azure OpenAI Services and 42% plan to use GitHub Copilot within the next 12 months.
Momentum is also building for Microsoft 365 Copilot. Morgan Stanley said 80% of CIOs plan to use the product in the coming year, marking “the fifth consecutive sequential increase.” Over a three-year horizon, CIOs expect Copilot adoption to reach 61% of employees.
Morgan Stanley added that Microsoft’s strength in generative AI, improving demand indicators and potential for margin expansion are “well underpriced, keeping Microsoft our Top Pick in large-cap software.”