A mid-year CIO survey conducted by Bernstein shows that corporate IT budgets are set to remain robust in 2026, matching the growth seen in 2025 and approaching the expansion observed during the COVID-19 period in 2021. The research exposes a notable geographic split in spending expectations, with U.S. respondents becoming more optimistic and European respondents pulling back.
On a regional basis, U.S.-based CIOs raised their forecast for full-year 2026 spending by 60 basis points. By contrast, European CIOs reduced their outlook by 130 basis points. The report attributes U.S. momentum to a strong first half of the year; however, it also notes that expectations for the second half of 2026 among U.S. CIOs have slipped over the last three months. In Europe, the pattern is reversed: after a weak start to the year, CIOs there reported greater hope for the latter half.
When asked where additional dollars will flow, CIOs ranked cybersecurity, generative AI applications, and platform software as the top three investment priorities. Additional spending activity appears concentrated among the major cloud providers, commonly referred to as hyperscalers, with infrastructure and application software also drawing favorable allocations.
The survey shows that the outlook for application software softened in this iteration, a shift Bernstein links to generative AI applications emerging as a distinct category of expenditure rather than being bundled within broader application software budgets.
Among individual vendors, Microsoft and Amazon Web Services are expected to capture the largest shares of incremental budget growth. Outside of the hyperscalers, ServiceNow and Salesforce are the only software vendors identified in the survey as showing modestly positive allocation trends.
Notably, CIOs do not expect to materially increase spending with large language model specialist vendors such as OpenAI and Anthropic. The survey suggests enterprises prefer to access AI capabilities through established software platforms rather than investing heavily in building internal AI models or direct relationships with standalone LLM providers.
Cloud adoption continues to rise, but enterprise approaches are diverging. Some companies are accelerating their migration and cloud-native initiatives, while others are choosing to retain on-premises environments. The survey indicates that cloud-native adoption accelerated and that public cloud remains the favored option for new applications. Despite this, hybrid cloud retains its position as the prevailing long-term architecture, driven by concerns about vendor lock-in and the desire for operational flexibility.
In assessments of the major cloud providers, Microsoft Azure is identified as the leader, AWS retains broad adoption, and Google Cloud is reported to be gaining market share. AI figures centrally in CIO strategic planning and is increasingly changing work processes across organizations. While generative AI is prompting some reallocation within IT budgets, the pressure on overall funding has eased as technology budgets expand and business units outside of IT add to AI-related spending.
CIOs generally expect AI workloads to run in the cloud and show a preference for packaged solutions delivered by established software vendors, rather than building bespoke in-house AI applications. Most respondents do not foresee AI supplanting enterprise software, shrinking long-term IT budgets, or causing a major shift in spending from software toward hardware.
On the platform landscape for AI, Microsoft is identified as the clear leader, followed by OpenAI, Google Gemini, Anthropic, and AWS. The survey reports that application software companies attempting to establish themselves as strategic AI platforms, including ServiceNow and Salesforce, have not yet achieved that status. In terms of use cases, programming and IT operations are now the leading applications for AI, followed by customer service and research and development.
Context and implications
The Bernstein mid-year CIO survey paints a picture of continued IT spending strength overall in 2026, but with meaningful regional divergence and shifting allocation patterns as generative AI moves from an embedded feature to a distinct category. Hyperscalers and platform-centric software vendors appear best positioned to capture incremental budgets, while direct spending on standalone LLM vendors is not expected to rise materially according to CIO responses.