Global spending on public cloud services is expected to exceed $1 trillion in 2026, representing growth of more than 21 percent, according to IDC report.
Andrea Minonne, research manager at IDC, projects that worldwide public cloud spending will double by 2029 as enterprises continue to modernize applications and scale artificial intelligence platforms.
IDC said the rapid expansion of cloud services is being driven by enterprise demand for scalable digital infrastructure, accelerated adoption of AI-enabled platforms, and large-scale modernization of legacy IT systems across industries.
SaaS Remains the Largest Segment
Software-as-a-Service (SaaS) will continue to dominate the global public cloud market in 2026, accounting for more than half of total spending. Enterprises are increasingly adopting SaaS solutions to support enterprise resource management, cybersecurity, and business-critical applications as organizations migrate workloads from on-premise environments to the cloud.
Investments in Infrastructure-as-a-Service and enterprise resource management platforms also remain strong as companies modernize core IT environments and strengthen data protection capabilities.
PaaS Emerges as the Fastest-Growing Cloud Segment
Platform-as-a-Service (PaaS) is expected to record the fastest growth among public cloud deployment models, expanding by more than 37 percent in 2026.
The surge is largely driven by the rapid growth of artificial intelligence development platforms, data platforms, and cloud-native application environments. Enterprises are increasingly deploying PaaS solutions to support generative AI, agentic AI systems, real-time analytics, and large-scale data processing workloads.
Banking, Software, and Retail Lead Cloud Spending
Several industries are driving the expansion of the public cloud market. Banking, software and information services, and retail are projected to account for roughly one-quarter of global public cloud spending in 2026.
Other major cloud-spending sectors include professional and personal services, capital markets, media and entertainment, telecommunications, and healthcare providers. Together, these industries are expected to represent more than a quarter of global cloud investments.
Among the fastest-growing industries adopting PaaS are banking, retail, and aerospace and defense. Banks are modernizing core systems and deploying AI-driven solutions for fraud detection and real-time services, while retailers are building applications for digital commerce, dynamic pricing, and supply chain optimization.
In aerospace and defense, rising defense budgets and geopolitical tensions are increasing investments in secure cloud platforms designed for analytics, intelligence, and mission-critical operations.
United States Leads Global Cloud Spending
Regionally, the United States will remain the largest public cloud market, with spending projected to reach about $647 billion in 2026. Growth is being supported by large enterprise cloud migrations, hyperscale investments in AI infrastructure, and strong demand from regulated industries.
Western Europe is expected to become the second-largest regional market, with cloud spending reaching approximately $255 billion as governments and enterprises invest in sovereign cloud initiatives, data protection, and AI governance frameworks.
The Asia Pacific excluding Japan and China region is projected to record $84 billion in public cloud spending, driven by expanding digital economies, midmarket cloud adoption, and government-backed digital transformation programs.
Emerging Regions Show Strong Growth Potential
IDC said several regions will record compound annual growth rates above 20 percent over the next five years, including the Middle East and Africa, Latin America, Asia Pacific excluding Japan and China, Central and Eastern Europe, and Western Europe.
These regions are benefiting from expanding digital infrastructure, government-led cloud initiatives, and growing adoption of cloud-native business models.
AI and Cloud-Native Applications to Shape the Market
Cloud migration will remain a central pillar of enterprise technology strategies as organizations seek agility, resilience, and operational efficiency. Industries such as aerospace and defense are increasing cloud investments as defense spending rises and geopolitical tensions intensify. Secure cloud platforms are becoming critical for advanced analytics, AI-driven intelligence, and mission-critical systems.
IDC expects public cloud services spending to maintain strong double-digit growth through 2029, driven by AI-enabled platforms, cloud-native application development, and industry-specific cloud solutions.
There are potential risks to growth, including regulatory fragmentation across regions, shortages of cloud and AI skills, and increasing pressure on organizations to optimize cloud costs.
RAJANI BABURAJAN
