Forrester: Public Cloud Poised to Surpass $1 Trillion By 2026

According to Forrester’s Public Cloud Market Outlook, the public cloud market will top more than $1 trillion worldwide by 2026. As this market matures, however, the report suggests that more moderate public cloud growth will be influenced by several factors: intense competition among the largest cloud providers; fragmentation of the market due to regulatory and political tensions; and edge computing vendors capturing an increasing share of IT spending in relation to cloud.

Forrester further finds that cloud infrastructure services will account for nearly $496 billion in revenue in 2026, as hyperscalers battle the increased commoditization of infrastructure. The report says that while hyperscalers will increase investments in technologies such as custom microchips and advanced wireless networking to match competitors’ offerings, this will be more of an opportunity to retain customers and shift them to higher-priced services than a key driver of revenue.

To maintain their influence over the public cloud market, hyperscalers and providers will need to prioritize major investments in other differentiated premium services, including database and analytics fueled by customer demand for AI/ML, according to the report. As customers seek AI and machine learning for product innovation and greater operating efficiency, database and analytics services revenue will rise threefold to $89.5 billion by 2026, according to Forrester which also says that cloud AI platforms will drive revenue increases in these services. Additionally, cloud-native technologies are expected to gain greater influence as they are increasingly infused into AI/ML standards and as Kubernetes becomes the de facto standard for IT infrastructure in the cloud. Revenue in this market segment is expected to rise to $51 billion by 2026. Factors including serverless becoming integral to app development on cloud platforms, automation, and integration of low-code into cloud development will fuel this growth.
The cloud applications market — a category dominated by non-hyperscalers that lead in SaaS — is expected to hit market saturation at nearly $397 billion by 2026, but this won’t stop hyperscalers from focusing on strengthening their SaaS offerings and being the best hosts for SaaS, according to Forrester.

“Public cloud has experienced nearly a decade of high growth and acceleration, even amid pandemic-induced challenges,” said Lee Sustar, principal analyst at Forrester. “This growth will continue into 2026. It will be challenged, however, by competitive pressure for hyperscalers and providers to make massive investments in services like database and analytics, development services, and SaaS — all while maintaining high levels of infrastructure investment to keep pace with their rivals’ innovation.”

Channel Impact^®
To remain profitable, leading cloud players, in conjunction with their channel partners, will need to pivot their investments to analytics, AI/ML, and other differentiated premium services.