Overview
Bernstein's mid-year CIO survey reaffirmed expectations for meaningful IT budget growth in 2026, projecting growth at levels similar to those seen in 2025 and comparable to the strong rebound following the COVID-19 downturn in 2021, according to a note from analyst Peter Weed on Wednesday.
Regional divergence
The survey indicates a clear geographic split in spending expectations. Full-year 2026 budget growth forecasts for U.S. enterprises rose by 60 basis points, while expectations for Europe deteriorated by 130 basis points. The timing of spend also differs by region: U.S.-based CIOs report a very strong first half of the year and anticipate weaker spending in the second half, whereas European CIOs, after a weak H1, say they are more optimistic about spending into the second half.
Investment priorities and vendor impacts
CIOs continue to prioritize cybersecurity, generative AI applications and platform software as their top three areas for investment. Bernstein's analysis shows incremental budgets are disproportionately flowing to hyperscalers rather than distributed equally across smaller vendors.
Among vendors, Microsoft and AWS are expected to secure the largest share of incremental budget growth. ServiceNow and Salesforce were noted as the only other software vendors showing modestly positive allocation trends in the survey.
Importantly, Bernstein reports that most CIOs do not plan to increase direct spending on large language model vendors such as OpenAI and Anthropic. The firm interprets this as evidence that enterprises prefer to access AI functionality through established enterprise software platforms instead of building or directly procuring foundational LLM capabilities.
Cloud posture and market share dynamics
Cloud adoption remains on an upward trajectory, but enterprise strategies are described as becoming "more bifurcated" - with some organizations deepening cloud commitments and others retaining significant on-premises environments. Microsoft Azure is identified as the clear leader among cloud providers in the survey, while Google Cloud is reported to be continuing to gain share.
CIO views on AI and IT budgets
Bernstein additionally notes that most CIOs do not expect AI to replace enterprise software, to reduce long-term IT budgets, or to shift spending away from software toward hardware. This suggests CIOs see AI augmenting existing platforms rather than displacing core software investments.
This analysis is based solely on the findings reported in Bernstein's mid-year CIO survey as summarized in a note by Peter Weed.