Microsoft remains dominant in Generative AI, says Morgan Stanley survey

Microsoft's major edge: Microsoft continues to exhibit its dominance in the Generative AI sector, as per Morgan Stanley analysts, who revealed this help from data sourced from a recent 2Q24 CIO survey. The survey results has indicated that Microsoft's leadership in Generative AI is driving significant incremental gains in Information Technology (IT) market share.

The report further reveals that Microsoft's position in core spending intentions and Generative AI is getting a boost. Core spending growth expectations for Microsoft have risen to 6.6 per cent, the highest level since Q2 2021. This growth is largely driven by Microsoft's robust Generative AI capabilities and its Azure Cloud business.

CIOs are in particular upbeat about Microsoft's Generative AI offerings. The survey reveals that 94 per cent of CIOs plan to adopt Microsoft Generative AI products within the next 12 months, a significant increase from 63 per cent  in Q4 2023 and 47 per cent in Q2 2023.

Among Microsoft's Generative AI solutions, Microsoft 365 Copilot is the most favored, with 68 per cent of CIOs intending to use it. Azure OpenAI Services follows at 41 per cent.

The survey also shows a marginal uptick in Microsoft's broader IT budget growth. IT budgets are projected to grow by 3.5 per cent in 2024, a modest improvement from the previous quarter. Software spending intentions have increased to 3.6 per cent year-over-year.

Morgan Stanley has stated that CIO growth expectations for Microsoft have increased +165 basis points compared to our prior survey.

Azure remains a key driver of Microsoft's growth strategy. Among CIOs currently using or planning to use Azure, 60 per cent expect to increase their spending over the next 12 months, up from 52 per cent in Q2 2023. This trend underscores the sustained momentum in Microsoft's cloud business.

Microsoft's continued dominance in the Generative AI sector is translating into meaningful IT share gains, positioning the company strongly for future growth.

(With agency inputs)