Forecast Snapshot
- Public cloud services spending: expected to exceed $1 trillion in 2026 (growth >21 percent).
- Near-term trajectory: forecasts point to continued strong growth and a possible doubling of market size within a few years.
- Key demand drivers include AI platforms and model hosting, SaaS expansion, and Application modernization.
A trillion dollars. That is how much businesses around the world are on track to spend on public cloud services this year. According to new data from International Data Corporation, global public cloud spending will surpass $1 trillion in 2026, up more than 21% from the previous year. It is the kind of number that would have seemed outrageous just a decade ago, but here we are.
What is pushing the market past this threshold? Artificial intelligence is a big part of the story, but so is something less flashy and arguably more important: enterprise organizations are simply moving more of their core operations into the cloud.
SaaS adoption continues to expand; Platform-as-a-Service is growing faster than even veteran cloud analysts expected, and spending from industries like banking, retail, and defense is climbing rapidly. The public cloud is no longer infrastructure for the tech-forward. It is infrastructure, full stop.
SaaS Holds the Crown, PaaS Steals the Show
Software-as-a-Service will remain the single largest slice of global public cloud spending in 2026, accounting for more than half of the total market. Think of SaaS as the kitchen table of enterprise IT: it is where most of the daily work actually happens. ERM platforms, cybersecurity tools, CRM systems, and productivity suites all get delivered through SaaS models. For most organizations, this type of cloud spending is as predictable as a utility bill.
But the growth story belongs to PaaS. Platform-as-a-Service spending is forecast to expand by more than 37% year over year in 2026, a pace that makes SaaS look leisurely by comparison. The explanation is fairly direct: companies building AI systems, deploying machine learning models, or creating cloud-native applications need developer environments that can handle data-intensive, real-time workloads. On-premises infrastructure does not cut it for generative AI or agentic AI applications. PaaS platforms do.
The distinction matters for anyone tracking where cloud investment is headed. SaaS is stable, broad, and dominant. PaaS is where the acceleration is happening right now, and IDC’s numbers suggest that momentum has real legs through the rest of the decade.
Which Industries Are Driving the Numbers
Banking, software and information services, and retail will be the three largest public cloud-spending industries in 2026, together contributing roughly 25% of global expenditure. That is not particularly surprising. Financial institutions have been in the middle of multi-year core system modernizations, and cloud platforms are central to deploying fraud detection, real-time payments, and AI-driven risk tools.
Retail’s continued climb up the cloud spending charts reflects how much customer expectations have shifted. The ability to change pricing dynamically, optimize inventory in real time, and build out digital commerce experiences quickly all depend on cloud infrastructure. Retailers that are not leaning into these capabilities are already feeling the competitive pressure from those that are.
The standout shift, though, is what is happening in aerospace and defense. Rising geopolitical tensions and expanded defense budgets across NATO member states are pushing government contractors and defense agencies toward secure, cloud-based platforms capable of handling advanced analytics and mission-critical AI workloads. It is a relatively new dynamic in the cloud market, and IDC flags it as one of the fastest-growing pockets of PaaS adoption globally.
IDC Research Manager Andrea Minonne noted:
In aerospace and defense, higher budgets and rising geopolitical tensions are driving demand for secure, cloud-based platforms supporting advanced analytics and mission-critical systems, with increased defense spending across NATO members and escalating tensions in the Middle East accelerating investment in AI-enabled and security-focused cloud environments.
Andrea Minonne, research manager at IDC
Beyond the top three sectors, five additional industries, professional and personal services, capital markets, media and entertainment, telecommunications, and healthcare providers, are expected to collectively represent more than a quarter of global public cloud spending. Each of these sectors is integrating cloud infrastructure to support digital service delivery and AI-enabled customer applications in its own way.
A Closer Look at Regional Spending
The United States dominates, and it is not particularly close. U.S. public cloud spending is expected to reach approximately $647 billion in 2026, driven by the scale of enterprise cloud migrations, hyperscaler infrastructure buildouts for AI, and persistent demand from regulated industries, including financial services and healthcare.
American enterprises also benefit from a dense ecosystem of cloud-native software vendors, which keeps adoption rates high across company sizes.
| Region | 2026 Spending Estimate | Key Growth Drivers |
|---|---|---|
| United States | ~$647 billion | Sovereign cloud, data protection regulation, and AI governance |
| Western Europe | ~$255 billion | Digital transformation programs, midmarket adoption, and government initiatives |
| APeJC | ~$84 billion | Digital transformation programs, midmarket adoption, government initiatives |
| Middle East and Africa, Latin America, CEE | High growth trajectory | Digital adoption acceleration, 20%+ five-year CAGR |
Western Europe comes in second at roughly $255 billion, though the dynamics there are distinctly different from the U.S. European cloud adoption is being shaped heavily by regulatory forces: GDPR compliance requirements, the EU AI Act, and growing interest in sovereign cloud solutions, environments architected specifically to meet regional data residency laws, are all accelerating enterprise decision-making on cloud infrastructure. Organizations that might have dragged their feet on cloud migration are now finding that staying on legacy systems is the harder compliance position to defend.
Asia-Pacific excluding Japan and China is forecast to reach around $84 billion. Government-backed digital transformation programs across Southeast Asia, India, and other markets in the region are encouraging cloud adoption among public sector organizations and midmarket companies that previously lacked the internal expertise to move quickly. Infrastructure investment follows demand.
Emerging Regions Are Worth Watching
The Middle East and Africa, Latin America, and Central and Eastern Europe are all expected to post compound annual growth rates above 20% over the next five years. These are not yet massive markets in absolute terms, but the trajectory is steep. Expanding digital economies, rising connectivity, and increasing access to cloud services from global providers are combining to accelerate adoption faster than many analysts predicted even two years ago.
The Path to $2 Trillion: What IDC Says About the Years Ahead
IDC’s projections suggest the global public cloud market will roughly double by 2029. That is a striking forecast, and it rests on a few specific assumptions: AI monetization continues to scale, cloud-native application development becomes the default across enterprise environments, and industry-specific cloud solutions gain traction in sectors that have historically moved slowly on technology adoption.
Strong growth is expected. But IDC’s analysts are candid about the risks. Three stand out.
Regulatory fragmentation is the first. Different countries and regions are developing different frameworks for data governance, AI accountability, and cloud security. Organizations operating across multiple jurisdictions face an increasingly complicated compliance environment, and the cost of navigating that complexity can slow deployment timelines.
Skills shortages are the second. The cloud and AI talent market is tight globally, and there is no obvious short-term fix. Companies that cannot find or retain engineers capable of building and managing cloud-native systems will see their digital transformation timelines stretch out, regardless of how much budget they have allocated.
Cloud cost optimization is the third. As spending scales, so does pressure from boards and CFOs to demonstrate return on cloud investment. Organizations that expanded cloud usage rapidly during the AI boom of the mid-2020s are increasingly scrutinizing their bills and looking for areas to rationalize. This does not stop growth, but it introduces friction that pure demand forecasts do not always capture.
About IDC and the Spending Guide Behind These Numbers
International Data Corporation, commonly known as IDC, has been tracking global technology markets since 1964. The firm operates with more than 1,000 analysts in over 100 countries, and its spending forecasts carry significant weight in enterprise IT planning, investment decisions, and vendor strategy discussions.
The figures cited in this article come from IDC’s Worldwide Software and Public Cloud Services Spending Guide, a recurring research product that tracks public cloud purchases across 28 industries, 8 company size categories, and 53 countries. The guide is updated regularly and delivers data in queryable formats that allow technology buyers and vendors to analyze market direction in detail.