AI rises to the top of the CIO's priority list, Morgan Stanley's new survey shows

investing.com:

The latest survey from Morgan Stanley shows that the annual acceleration of IT budgets in 2024 is projected to be underpinned by the robust strength of secular trends, particularly in Generative AI (GenAI) and the Public Cloud.

According to the broker’s CIO Survey conducted between October 23rd and December 11th, there is a reaffirmation of expectations for IT budget growth acceleration in 2024, reaching +3.3%, a 73 basis points increase from the 2.6% recorded in 2023.

Despite this positive trend, the readings for both 2023 and 2024 remain below the 10-year pre-Covid average of 4.1%.

Across different sectors, Software continues to lead as the fastest-growing sector, expecting a YoY increase of +25 basis points to +3.4% growth.

Communications anticipates a +41 basis points acceleration to +2.8% growth, followed by IT Services with a +21 basis points increase to +2.6% growth, and Hardware projecting a +41 basis points acceleration to +1.7% growth.

Regionally, the United States is expected to outpace the European Union counterparts in IT spending growth for both 2023 and 2024. The 1-year up-to-down ratio, a forward indicator measuring the ratio of CIOs expecting to revise their budgets higher/lower, has improved to 0.8x, although still biased to the downside.

Longer-term secular trends present a positive outlook, with a 3-year up-to-down ratio of 4.9x, indicating that more CIOs anticipate IT spending to grow as a portion of revenue over the next three years than decline.

Generative AI gains prominence, with 68% of CIOs indicating direct impacts on their investment priorities, making it the top IT priority this quarter.

Morgan Stanley analysts wrote, “4Q23 survey data reinforces optimism for the IT spend landscape and the