MORGAN STANLEY: Executives say IT budgets are growing in 2019 and Amazon, Salesforce and Microsoft are set to win big (MSFT, AMZN, CRM)
Forget market volatility â companies continue to grow their IT budget and their allocations for buying new software, according to Morgan Stanley.
Morgan Stanley talked to 100 chief information officers in the US and Europe for its quarterly survey and found that CIOs expect their IT budgets to grow 4.7% in 2019. That growth is slightly down from 2018, when CIOs expected their budgets to grow 4.9%. The 2019 decline stems primarily from European CIOs, according to the report.
CIOs in the US actually expect to see 2019 budgets grow by 5.5%, which is up from 5.3% in 2018.
The big winner, according to the survey, is software, which CIOs said will grow 5.2% in 2019. Amazon and Microsoft are the biggest gainers of "IT wallet share," according to the survey, since so many companies will spend money on public cloud services, the market where those two companies lead.
Salesforce is also well-positioned to benefit from public cloud adoption, according to the report.
CIOs expect to increase their spending on IT services by 4% in 2019, up from 3.7% in 2018. In addition, 28% of the CIOs surveyed expect to over-spend their budgets when it comes to IT services.
Morgan Stanley analyst Keith Weiss wrote that companies like HCL, CTSH, Deloitte, and CAP are well-positioned to win from this spending. ACN was one of the top five companies most likely to benefit from spending on cloud migration, according to the report.
Spending in hardware, however, is not seeing the same growth. CIOs expect their hardware budgets to grow by just 2.2% in 2019. When these CIOs were surveyed last quarter in October 2018, they predicted 2.5% growth. US respondents in particular expect their hardware spending to grow by just 2%, according to the survey.
"The downtick is a signal that US-based tax reform and cash repatriation were meaningful positive catalysts last year with growth slowing on the more difficult comps," wrote Morgan Stanley's Keith Weiss.
Morgan Stanley
