Gartner forecasts USD $723.4 billion cloud spending by 2025

Gartner has forecasted that global end-user spending on public cloud services will reach USD $723.4 billion in 2025, a notable increase from USD $595.7 billion in 2024.

In Australia, the expenditure on public cloud services is anticipated to hit AUD $26.5 billion in 2025, marking a 20.5% rise from 2024. The fastest-growing segments in this market are expected to be Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS), with projected growth rates of 24.2% and 23.1%, respectively.

Sid Nag, the Vice President Analyst at Gartner, commented on the integration of artificial intelligence in business operations, "The use of AI technologies in IT and business operations is unabatedly accelerating the role of cloud computing in supporting business operations and outcomes. Cloud use cases continue to expand with increasing focus on distributed, hybrid, cloud-native, and multicloud environments supported by a cross-cloud framework, making the public cloud services market achieve a 21.5% growth in 2025."

Gartner anticipates that 90% of organisations will adopt a hybrid cloud strategy by 2027. A primary challenge that organisations will face in the upcoming year is synchronising data across hybrid cloud environments.

All areas of the cloud market are set to experience double-digit growth in 2025. This growth underscores the pressure on infrastructure and operations (I&O) leaders to integrate their strategies effectively with emerging General AI (GenAI) technologies and prepare for deploying AI and GenAI infrastructure at the edge.

Specific categories of cloud services are expected to see varied growth rates. Cloud Application Infrastructure Services (PaaS) are projected to increase to USD $208.6 billion, up 21.6% from the prior year. Cloud Application Services (SaaS) is expected to grow to USD $299.1 billion, indicating a 19.2% rise. Meanwhile, Cloud Desktop-as-a-Service (DaaS) will see an 11.1% increase to USD $3.8 billion, and Cloud System Infrastructure Services (IaaS) are set to grow to USD $211.9 billion, representing a 24.8% rise.

The growing demand for industry-specific GenAI models requiring specialised training and secure environments is a key factor driving the global increase in cloud services spending.

Gartner's definition of cloud infrastructure and platform services (CIPS) highlights the integration of IaaS and PaaS capabilities. Organisations are attracted to CIPS due to the complexity of their current workloads and the need for streamlined development, deployment, and operations. Sid Nag further explained, "Organisations are choosing CIPS because workloads of today are complex, and organisations are seeking integrated platforms to simplify development, deployment and operations. Organisations deploying a multicloud adoption model, which is still recording growth, are also driving spend on CIPS."

The adoption of cross-cloud integration frameworks, which enhance multicloud capabilities and advanced AI workloads, is expected to be pivotal in the CIPS model's growth. Gartner forecasts that spending on CIPS will increase by 24.2% in 2025, reaching USD $301 billion. CIPS offerings are predicted to account for 72% of the total IT spending on IaaS and PaaS in 2025, up from 70% in 2022.