The survey of 150 IT professionals suggests 4% growth in 2005, up from 3.3% in 2004. A regression of IT spending against S&P500 earnings suggests a more robust 7% growth.
The survey also points out that Asia Pacific and the US should continue to lead spending, while Europe continues to remain anaemic with only 0.3% growth in 2005.
In an indication of how bad the ecomonies of Europe are in at the moment, 53% of European respondents did not see spending rising until 2006, although JP Morgan beleives this outlook will improve during the course of the year.
The sectors that should see the most spending are security, where spending should continue to dominate, with the big getting bigger and access control gaining steam. JPMorgan highlights that this trend will favour the security big boys, the likes of Symantec Corp, Check Point Software Technologies Ltd, and RSA Security Inc.
In other sectors, ERP standardisation and the blurring of lines between applications and infrastructure should continue to favour SAP AG and Oracle Corp as this market continues to consolidate.
Business Intelligence is also likely to be another pocket of strength, as product releases scheduled for this year could drive further spending. JPMorgan points out that Canadian business intelligence software vendor Cognos Inc, and Hyperion Solution Corp remain its favoured players in this sector, although it does believe that Business Objects SA may find traction later in the year.
Long-term storage expenditure is expected to grow at a 6% annual rate, with networked storage and software capturing the majority of this growth. EMC Corp remains the top pick for this trend.
Meanwhile, in the services sector JPMorgan favours such companies as Accenture, Bearing Point and Hewitt Associates, which have more exposure to faster-growth Business Process Outsourcing (BPO) and the rebounding project-oriented services space. Infosys and TCS are its top Indian picks given their execution, quality management and ability to win large contracts.
The survey also asked respondents to indicate how their view of the recovery has progressed since June last year. The survey apparently detected slightly improved optimism, with 33% of respondents indicating they are more optimistic while 23% indicated decreased optimism (40% unchanged).
Additionally, on average respondents indicated that they expect to increase their rate of capital spending towards the end of 2005. Breaking this up by region indicated that Asia Pacific and the Americas were much more optimistic about increasing spending in the first half of 2005. Europe is apparently looking to increase spending in 2006 and beyond.
