For years, the cloud computing sector operated on an elegant premise: compute and storage were borderless commodities, and scale wins. The hyperscalers built empires on that assumption.
But a confluence of geopolitical friction, data nationalism, and hard-learned lessons about digital dependency is now rewriting that traditional rulebook.
Gartner's latest market study found worldwide sovereign cloud Infrastructure-as-a-Service (IaaS) spending will reach $80 billion in 2026 — that's a 35.6 percent surge from 2025 — climbing further to $110 billion by 2027.
This is a structural shift in how governments, enterprises, and critical infrastructure operators think about where their data lives, who controls it, and what national interests it serves.
Sovereign Cloud Market Development
The regional breakdown is where the real strategic intelligence lies.
China leads all markets at an estimated $47 billion in 2026, underscoring that state-driven infrastructure investment is a long-established playbook in Beijing.
North America follows at $16 billion, though both regions are growing at a comparatively modest 20-29 percent rate. The more instructive change is unfolding elsewhere.
The Middle East and Africa (89 percent growth), Mature Asia/Pacific (87 percent), and Europe (83 percent) are the three fastest-growing regions in this space.
Europe's trajectory is perhaps the most consequential for the global cloud industry: spending is expected to jump from $6.9 billion in 2025 to $12.6 billion in 2026, and then to $23.1 billion in 2027; at which point it will surpass North America entirely.
That progression, tripling in just two years, reflects not just budget increases, but a fundamental reorientation of business technology strategy across the continent.
Two other Gartner data points deserve serious scrutiny.
First, approximately 80 percent of sovereign cloud IaaS spend will come from net-new digital solutions or legacy on-premises workloads finally making their cloud transition, but now routing to local providers rather than global hyperscalers.
Second, and perhaps most disruptive, Gartner estimates that 20 percent of existing hyperscaler workloads will be migrated to local cloud providers through what analysts are calling "geopatriation"; a term that didn't exist in the enterprise lexicon five years ago.
Geopatriation, specifically the strategic repatriation of digital assets to align with national or regional interests, is the concept that global hyperscalers should find most alarming.
A European bank moving core banking workloads off an American-owned cloud, or a telecoms provider opting for a locally governed infrastructure stack, represents real revenue migration.
The recent high-profile case of senior International Criminal Court staff being cut off from cloud services for political reasons is precisely the kind of event that concentrates minds in boardrooms and government ministries alike.
A growing number of European organizations are now making formal commitments to direct a fixed percentage of annual technology spending to local IT providers. That is not a technical choice, it is an executive policy posture.
Cloud Computing Geopatriation Momentum
The hyperscalers are not standing still. AWS launched its European Sovereign Cloud as a generally available offering in early 2026, providing EU-resident infrastructure with governance designed to address regulatory concerns.
IBM introduced its Sovereign Core platform, enabling customers to deploy and manage cloud computing and AI workloads under their own organizational authority.
These are meaningful moves, but Gartner's analysts are clear that treating digital sovereignty purely as a compliance and security checkbox is a strategic miscalculation.
Local cloud computing providers, purpose-built for sovereign requirements, are positioned to capture the most value as the market evolves and continues to restructure.
Outlook for Sovereign Cloud Apps Growth
For technology leaders, three trends will dominate in the next 24 months. The first is the rise of hybrid sovereign architectures; organizations maintaining hyperscaler relationships for some workloads while deploying local sovereign infrastructure for regulated or sensitive data.
The second is Applied-AI Initiatives, as sovereign AI processing requirements accelerate investment in local compute capacity. The third is government procurement reform, with public sector buyers increasingly mandating sovereign cloud as a baseline requirement.
"Governments will remain the main buyers to meet digital sovereignty needs, followed by regulated industries and critical infrastructure organizations, such as energy and utilities and telecommunications," said Rene Buest, senior director analyst at Gartner.
That being said, I believe the forecast of $110 billion in IaaS spending is the one that should shape the strategic investment roadmap. Strategic IT infrastructure independence, and avoiding the predictable challenge of vendor lock-in, will drive investment decisions across the globe.