As artificial intelligence transforms software development, Morgan Stanley Research predicts that AI will create more jobs for developers rather than replace them.
The Morgan Stanley report How AI Coding Is Creating Jobs argues that as AI coding tools become integral to development workflows, enterprises will build increasingly complex applications, expanding demand for skilled engineers.
According to Morgan Stanley’s analysis, the software development market is projected to grow at a 20% annual rate, rising from $24 billion in 2024 to $61 billion by 2029. Supporting this outlook, a Morgan Stanley AlphaWise survey of CIOs found that software spending is expected to increase by 3.9% in 2026, outpacing other IT categories such as communications, IT services, and hardware.
Analysts note that AI-assisted coding is shifting the developer’s role from manual programming toward more strategic functions such as curation, integration, review, and problem-solving. This evolution is expected to make developers more valuable within organizations and may fuel headcount growth of between 1.6% and 10% annually through the end of the decade, depending on the forecast.
However, the acceleration of AI-generated code also introduces new challenges in testing, review, and quality assurance, as engineers face higher code volumes and more bugs to manage. This complexity, the report suggests, will open new opportunities for software providers to develop AI agents that assist in testing, security, verification, and deployment, while keeping humans in oversight and design roles.
Overall, Morgan Stanley concludes that AI is set to enhance productivity, drive innovation, and expand employment in the software sector. Rather than reducing workforce needs, AI is expected to enable organizations to build more, launch more products, and grow faster, turning developers into even more central players in the digital economy.
