Sovereign Cloud IaaS spending set to reach USD 80bn in 2026

Worldwide spending on sovereign cloud infrastructure as a service (IaaS) is forecast to reach USD 80 billion in 2026, representing a 35.6% increase from 2025, according to Gartner.

“As geopolitical tensions rise, organisations outside the US and China are investing more in sovereign cloud IaaS to achieve greater digital and technological independence,” said Rene Buest, Senior Director Analyst at Gartner. “A key objective is to retain value creation within national borders in order to support and strengthen local economies.”

Governments are expected to remain the primary buyers of sovereign cloud IaaS, driven by digital sovereignty requirements. Regulated industries and operators of critical infrastructure, including energy, utilities and telecommunications, are also projected to be significant contributors to demand, according to Buest.

From a regional perspective, the Middle East and Africa (89%), Mature Asia/Pacific (87%) and Europe (83%) are forecast to see the fastest growth in sovereign cloud IaaS spending in 2026. China and North America are expected to rank first and second in overall spending, at USD 47 billion and USD 16 billion respectively, although growth in both regions is projected to be around 20%. Europe is forecast to overtake North America in sovereign cloud IaaS spending in 2027.

Table 1: Sovereign Cloud IaaS Spending by Region, 2025–2027
(Millions of US Dollars)

Source: Gartner, February 2026

Geopatriation Drives Changes in Cloud Sourcing

Gartner notes that “geopatriation”,the movement of digital assets and workloads back to national or regional environments, is increasingly influencing cloud strategies. As a result, sovereign cloud IaaS spending is expected to shift around 20% of existing workloads from global hyperscalers to local cloud providers.

In addition, Gartner estimates that 80% of sovereign cloud IaaS spending will be driven by net-new digital initiatives or by legacy workloads that have yet to migrate to the cloud. This trend reflects both regulatory pressure and a growing preference for cloud environments that align with national policy and security requirements.

Large cloud providers are therefore facing increased competition as local providers gain market share and governments demand greater regionalisation of platforms. “To compete effectively for local customers, global cloud providers must fully address country-specific sovereignty concerns and requirements,” Buest said. “Treating digital sovereignty purely as a security, regulatory or compliance issue is no longer sufficient.”