Investing.com -- According to recent surveys from Jefferies and Morgan Stanley (NYSE:MS), spending in key tech sectors is set to grow in 2025, with a strong emphasis on cybersecurity and hardware.
Jefferies' survey of 40 CIOs reveals that "CIOs expected cyber to lead IT & Software (ETR:SOWGn) budget growth in '25 at 6.1% yoy."
While this marks a slight decrease from 6.5% in 2024, cybersecurity remains a top priority, growing faster than both software (4.5%) and IT budgets (3.8%), according to the firm.
Despite its growth, cybersecurity is "not perceived as a primary near-term AI beneficiary," trailing behind cloud service, data, and application providers, added Jefferies.
Cloud spending is also projected to accelerate significantly, with CIOs forecasting an increase from 9.6% in 2024 to 11.9% in 2025. Security ranks as the most important factor when selecting a cloud vendor, which Jefferies views positively for key players like CrowdStrike (NASDAQ:CRWD) and Palo Alto Networks (NASDAQ:PANW).
PANW is said to be the standout, with 56% of respondents expecting spending to accelerate, up from 15% in June 2024.
Meanwhile, Morgan Stanley’s 4Q24 VAR Survey offers a more optimistic outlook for hardware spending in 2025, projecting growth of 5.1% year-over-year—a significant acceleration from 1.7% in 2024.
Storage, servers, and PCs are expected to lead this growth, with storage seeing a 5.9% increase. This optimism supports Morgan Stanley’s bullish positioning on enterprise hardware and has led to an upgrade of Ingram Micro to Overweight, with a price target increase from $25 to $27.
Both surveys highlight robust growth expectations in cybersecurity and hardware, indicating continued strong demand in these sectors for 2025.