Global spending on public cloud services is poised for exponential growth, with Gartner projecting a rise to $723.4 billion by 2025, up from $595.7 billion in 2024. This 21.5% year-over-year increase reflects the pivotal role in supporting organizations as they implement AI-driven and hybrid cloud strategies.
As Sid Nag, Vice President Analyst at Gartner, explains, “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.”
At the forefront of this transformation is the adoption of hybrid environments, which Gartner estimates 90% of organizations will embrace by 2027. Enterprises are increasingly prioritizing platforms that simplify the integration of infrastructure, operations, and GenAI functionalities, pushing segments like Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) to record growth rates.
Why It Matters: The rapid growth of public cloud services highlights the critical role of scalable and integrated solutions in managing advanced workloads, especially those driven by generative AI. Hybrid and multicloud frameworks are emerging as indispensable tools for organizations, offering the flexibility, efficiency, and resilience needed to navigate today’s AI-powered business landscape.
This surge in demand is evident across all cloud market segments, which are projected to see robust double-digit growth in 2025. Table 1 below highlights the detailed spending forecasts, emphasizing the scale of investment:
- Public Cloud Spending Trends: Spending is projected to reach $723.4 billion in 2025, representing a 21.5% increase from 2024. Infrastructure (IaaS) and platform services (PaaS) are the fastest-growing segments, with spending expected to grow by 24.8% and 21.6%, respectively.
- Hybrid Adoption: By 2027, 90% of organizations are anticipated to adopt hybrid cloud strategies, focusing on seamless integration and data synchronization across environments to unlock the full potential of AI and GenAI.
- GenAI Synergy: Industry-specific GenAI models requiring secure, private infrastructures are accelerating demand for advanced cloud solutions. Gartner predicts that federated capabilities will enable organizations to support complex AI-driven use cases.
- CIPS Dominance in IT Budgets: Spending on Cloud Infrastructure and Platform Services (CIPS) is forecast to reach $301 billion in 2025, making up 72% of IT budgets for IaaS and PaaS. This reflects a growing preference for integrated platforms to simplify operations and enhance efficiency.
