Global spending on public cloud services is forecast to surpass $1 trillion in 2026 – growing over 21% – and is expected to double by 2029, according to the latest update of International Data Corporation’s (IDC) Worldwide Software and Public Cloud Services Spending Guide.
Growth is driven by enterprise-wide application modernization, accelerating adoption of AI-enabled platforms, and rising demand for secure, scalable digital infrastructure across industries.
Growth of public cloud services is led by continued expansion of Software-as-a-Service (SaaS) and a sharp acceleration in Platform-as-a-Service (PaaS) adoption as organisations scale AI development, data platforms, and cloud-native application environments.
Key conclusions include:
- Total public cloud services spending: >$1-trillion (+21% YoY)
- Largest deployment category: SaaS, more than half of total spend
- Fastest-growing deployment category: PaaS, +37% YoY
- Top spending industries: Banking, Software and Information Services, Retail (25% combined)
- Fastest-growing industries: Capital Markets, Banking, Software and Information Services
- Leading regions: United States ($647-billion), Western Europe ($255-billion), APeJC ($84-billion)
- Five-year CAGR above 20%: Middle East and Africa, Latin America, APeJC, Central and Eastern Europe, Western Europe
SaaS anchors market scale
SaaS will remain the largest public cloud deployment category in 2026, accounting for more than half of global spending. Looking at the largest secondary markets, investments are concentrated in IaaS, Enterprise Resource Management (ERM), and security software, reflecting enterprise priorities around cloud migration and cybersecurity, and core modernization.
PaaS fuels growth momentum
PaaS will be the fastest-growing deployment model, expanding over 37% year-over-year in 2026. Growth is driven by rising demand for artificial intelligence (AI) platforms and application development software, as organisations adopt cloud-native environments to support generative and agentic AI, real-time analytics, and data-intensive workloads.
Industry trends
Banking, software and information services, and retail will be the three largest public cloud–spending industries in 2026. The next five largest industries — Professional and Personal Services, Capital Markets, Media and Entertainment, Telecommunications, and Healthcare Providers — will account for more than a quarter of global spending.
Fastest-growing industries for PaaS
- Banking: Institutions are modernising core systems and deploying AI-driven risk, fraud, and real-time banking services.
- Retail: PaaS supports rapid development of applications for dynamic pricing, inventory optimization, and digital commerce.
- Aerospace and Defense: Increased defense budgets and geopolitical tensions are driving investment in secure cloud platforms supporting analytics, AI-enabled intelligence, and mission-critical systems.
Regional outlook
- United States: Spending will reach $647-billion in 2026, supported by large-scale enterprise migrations, hyperscaler AI infrastructure investment, and strong demand from regulated industries.
- Western Europe: The market will total $255-billion, driven by cloud modernization programs, sovereign cloud adoption, and regulatory-led investment in data protection and AI governance.
- APeJC: Spending will reach $84-billion, fuelled by expanding digital economies, midmarket cloud adoption, and government-led digital transformation initiatives.
“Public cloud spending will continue to grow as cloud migration remains central for agility, resilience, and efficiency,” says Andrea Minonne, research manager at IDC.
“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.”
IDC’s outlook is that public cloud services spending will maintain strong double-digit growth through 2029, as AI-enabled platforms, cloud-native application development, and industry-specific cloud solutions become embedded in enterprise digital strategies.
Growth could accelerate with broader AI monetization, while risks include regulatory fragmentation, skills shortages, and cloud cost optimisation pressures.