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MORGAN STANLEY: Executives say IT budgets are growing in 2019 and Amazon, Salesforce, and Microsoft are set to win big (MSFT, AMZN, CRM)

Microsoft CEO Satya Nadella smiles during the 'Question and Answer' portion of the 2016 Microsoft Annual Shareholders Meeting at the Meydenbauer Center November 30, 2016, 2016 in Bellevue, Washington.

  • Information-technology budgets are still growing, according to a Morgan Stanley survey of chief information officers in the US and Europe.
  • Chief information officers in the US expect their budgets to grow 5.5% in 2019. That's up from 5.3% in 2018.
  • The big winner will be software, according to the report, where spending is expected to grow the most.

Forget market volatility — companies continue to grow their information-technology 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 the executives expect their IT budgets to grow 4.7% in 2019. That growth is slightly down from 2018, when they expected their budgets to grow 4.9%. The 2019 decline stems primarily from European chief information officers, according to the report.

IT spending growth

Chief information officers in the US 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 chief information officers said would 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.

Chief information officers expect to increase their spending on IT services by 4% in 2019, up from 3.7% in 2018. In addition, 28% of those surveyed expect to overspend their budgets when it comes to IT services.

Morgan Stanley analyst Keith Weiss wrote that companies including HCL Technologies, Cognizant, Deloitte, and Capgemini are well positioned to win from this spending. ACN was one of the 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. Chief information officers expect their hardware budgets to grow by just 2.2% in 2019. When they were surveyed last quarter in October 2018, they predicted 2.5% growth. US respondents 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," Weiss wrote.

IT spending sector

SEE ALSO: With China in sharp focus, Morgan Stanley forecasts a rough 2019 for the companies that make the chips in the world's smartphones and servers

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