Microsoft best positioned to capture incremental share of GenAI spend: MS

Investing.com -- Microsoft is set to take a larger share of rising generative AI spending and expanding software budgets in 2026, according to Morgan Stanley’s latest 4Q25 CIO Survey.

Analyst Keith Weiss said Microsoft “remains in pole position to garner increasing IT Wallet share as GenAI adoption ramps and cloud migrations pick up,” with the bank reiterating its Overweight rating and naming the stock a Top Pick.

CIOs expect software budgets to accelerate modestly to 3.8% in 2026, up from 3.7% in 2025, according to the bank.

Within that 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 shows 92% of CIOs expect to use Microsoft’s generative AI products in the next year, broadly stable from 95% a year ago.

Azure continues to lead among cloud providers. CIOs report that 53% of application workloads already reside on Azure, with the survey indicating this leadership is expected to persist over the next three years.

Weiss highlighted Azure AI as a “key priority,” with 37% of CIOs expecting to use Azure OpenAI Services and 42% planning to use GitHub Copilot in the next 12 months.

Adoption of Microsoft 365 Copilot also continues to climb, with Morgan Stanley noting that 80% of CIOs plan to use it in the next year, “the fifth consecutive sequential increase.” CIOs expect Copilot penetration to reach 61% of employees over three years.

Morgan Stanley said Microsoft’s generative AI leadership, strengthening demand signals and margin expansion potential are “well underpriced, keeping Microsoft our Top Pick in large-cap software”

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