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Australian public-cloud spending is forecast to reach A$33.6 billion in 2026, a 17.9% increase on 2025, according to Gartner. That is a spending forecast—not evidence that cloud adoption rates or the share of workloads in the cloud will rise by 17.9%. The clearest policy shift is in government: a new Commonwealth cloud policy took effect on 1 July 2026, guiding agencies toward cloud while requiring them to manage security, resilience, cost and legacy transitions.
What the forecast says—and what it does not
Gartner’s 11 May 2026 forecast puts Australian end-user spending on public-cloud services at A$33.6 billion in 2026, up 17.9% year over year. Gartner forecasts infrastructure-as-a-service (IaaS) spending to grow 24.1% and platform-as-a-service (PaaS) spending to grow 20.9%. Software-as-a-service (SaaS) remains the largest category, at A$16.377 billion. Gartner’s forecast measures spending; it does not give a 2026 adoption rate for Australian organisations or workloads.
That distinction matters. Spending can rise because existing cloud customers use more compute or higher-priced services, even if the number of organisations adopting cloud does not change. The forecast supports a surge in expenditure, not a matching surge in adoption.
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Why cloud spending is expected to grow
AI infrastructure demand
Gartner attributes stronger near-term demand for cloud infrastructure to AI compute needs, as organisations move from early experiments toward real-time inference and agentic AI. Gartner analyst Adrian Wong said, “AI-driven demand for high-performance cloud infrastructure is changing how Australian organizations are prioritizing cloud spending this year.” This is Gartner’s explanation for its forecast, rather than a separately measured causal finding.
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Closer scrutiny of SaaS
Gartner says SaaS growth is slowing as organisations examine software licences, seat growth and application portfolios. SaaS is still forecast to account for A$16.377 billion in Australian spending in 2026; the slower growth reflects more scrutiny, not a forecast that the category will stop expanding.
What Australia’s new Commonwealth cloud policy changes
The Australian Government’s Whole-of-government Cloud Computing Policy commenced on 1 July 2026. It applies to non-corporate Commonwealth entities and encourages corporate Commonwealth entities to adopt it where appropriate. It is not a requirement for every Australian business, nor does it direct every agency to place every workload on public cloud. The policy allows public, private and hybrid models.
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The Digital Transformation Agency (DTA) policy sets expectations for agencies making new digital investments and transitioning legacy systems. Its aims include replacing ageing ICT, improving resilience and service delivery, using cloud securely and responsibly, managing expenditure transparently, and building workforce capability. The policy is an implementation framework—not evidence that government systems have already migrated.
Lucy Poole, DTA Deputy CEO, said the policy gives agencies “clear requirements” for more consistent cloud decisions and is intended to improve the security, performance and long-term sustainability of systems supporting essential services. In the DTA’s announcement, she also described cloud as “a critical enabler of a modern public service that effectively delivers for the community.”
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How much Australian cloud adoption can be measured?
The available figures show spending growth, policy direction and some public-sector use, but they do not establish a national adoption rate. The DTA said in January 2025 that more than 140 Commonwealth, state and territory agencies were using AWS at that time. That is a dated count of agencies using one provider; it does not say how many workloads had moved, what proportion of government systems were in cloud, or how much those agencies spent.
Similarly, the Australian Government announced in June 2025 that AWS planned to invest A$20 billion in Australian data-centre infrastructure over five years, including expansion in Melbourne and Sydney. The announcement described planned investment to support AI and other technology applications; it does not establish how much had been deployed by September 2026.
Which cloud providers are largest in Australia?
The most specific market-share figures cited here are Gartner’s 2023 estimates for Australian IaaS, reproduced in the ACCC’s 2025 report. They cover infrastructure-as-a-service—not all cloud services—and are not current 2026 shares.
| Provider | Australian IaaS share | Measure and source |
|---|---|---|
| Microsoft | 30.9% | Gartner estimate for 2023, as reported by the ACCC in 2025 |
| Amazon | 30.1% | Gartner estimate for 2023, as reported by the ACCC in 2025 |
| 20.6% | Gartner estimate for 2023, as reported by the ACCC in 2025 |
The ACCC’s cloud-services report provides a dated snapshot, not a basis for declaring which provider leads the entire Australian cloud market today. The figures do, however, show that these three providers accounted for most of the estimated IaaS market in 2023.
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What organisations should weigh before moving workloads
Cloud is not a single product or an automatic improvement over existing infrastructure. The DTA policy calls for agencies to assess options against requirements and use cases. Organisations considering a move can apply the same practical checks:
- Workload fit: Confirm that the provider’s services meet the application’s performance, availability and technical requirements.
- Security, privacy and regulation: Identify applicable obligations and verify that the proposed architecture and operating model address them.
- Data location and resilience: Understand where data and services will operate, how disruptions will be handled, and what recovery arrangements are available.
- Migration and exit: Estimate the cost and complexity of moving in, integrating systems, and later transferring data or workloads elsewhere.
- Interoperability and portability: Check whether applications and data can work across environments or be moved without extensive re-engineering.
- Skills and support: Establish whether the organisation has the people and operational support needed to run the chosen services.
- Total cost governance: Plan how usage, licences and costs will be monitored, including who is accountable for changes in consumption.
These questions are especially relevant where workloads are difficult to move or where a service interruption would have serious consequences. In its analysis of clearing and settlement facilities, the Reserve Bank of Australia discusses provider concentration, transparency, resilience and vendor lock-in. That discussion concerns financial-market infrastructure; it is not evidence that every cloud deployment is unsafe. It does illustrate why organisations in critical sectors need to examine concentration and exit risks explicitly.
What to take from the Australian cloud outlook
The forecast points to sharply higher public-cloud spending in 2026, with AI infrastructure demand among Gartner’s stated drivers. Commonwealth agencies are also working under a cloud policy that directs new investment and legacy transitions toward considered cloud use. Neither trend, on its own, proves how many Australian organisations or workloads have adopted cloud. For decision-makers, the practical question is not simply whether cloud is growing, but whether a particular workload can meet its security, resilience, portability and cost requirements in the cloud model selected.
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