Neocloud providers set to grab AI cloud market share

Neocloud providers will capture 20% of the USD $267 billion AI cloud market by 2030, according to Gartner, signalling a growing challenge to established hyperscalers.

The research firm defines neoclouds as cloud providers built specifically for AI and high-performance workloads. Demand for generative AI is increasing the need for GPU-intensive computing while exposing the limits of traditional cloud models.

That shift is creating room for providers focused on AI-oriented infrastructure and, in some cases, sovereign hosting models. In Australia, companies such as Sharon AI and Firmus Technologies are among those seeking to benefit from demand for locally hosted infrastructure for enterprise AI use.

Sovereignty is also becoming a more prominent factor in cloud buying decisions as companies face stricter rules on where data is stored, processed and governed. Gartner linked that trend to existing GDPR requirements, the approaching enforcement of core transparency obligations under the EU AI Act and wider geopolitical concerns.

Market shift

The AI cloud market is moving into a phase in which sovereignty, performance and infrastructure specialisation are becoming central considerations for enterprise customers. That marks a shift from a market long dominated by large US-based hyperscalers with centralised global platforms.

Although those larger groups have begun introducing their own sovereign products, newer specialist providers are gaining traction. Their appeal lies in AI-focused infrastructure, deployment flexibility and pricing.

"While U.S. hyperscalers are launching their own sovereign offerings, a new wave of specialised neocloud providers is gaining significant traction," said Enrique Castera, Senior Director Analyst at Gartner.

He said some providers are putting sovereignty at the centre of their offer.

"These neoclouds are differentiated by their focus on AI-optimised infrastructure and high-performance workloads. Some also focus on sovereign cloud capabilities, ensuring data and operations remain within specific jurisdictions.

Sovereign neoclouds provide contractual guarantees that some or all aspects of the cloud environment, such as data, operations and governance, remain confined to national boundaries, protecting them from foreign legal claims and extraterritorial access," Castera said.

The issue is particularly relevant for businesses in regulated sectors and companies handling sensitive data. For those groups, cloud location and legal jurisdiction are becoming as important as computing capacity, especially as AI projects move from trials into operational systems.

Enterprise demand

As AI workloads expand, organisations are being pushed to reconsider cloud architecture and risk management. Instead of relying only on global cloud platforms, enterprises are increasingly assessing localised and hybrid models that offer both access to specialist AI computing and tighter control over data.

Constrained GPU supply is also driving that reassessment. Specialised providers may offer another route to secure computing resources at a time when many companies are competing for access to AI infrastructure.

"Neoclouds are offering differentiation via superior performance on AI workloads, flexible deployment models and a strong commitment to data sovereignty, often at a more competitive price point," Castera said.

He said market conditions now favour providers designed around AI from the outset.

"The AI cloud market is entering a new phase where sovereignty, performance and infrastructure specialisation are becoming primary decision factors for enterprises. As demand for GPU-intensive workloads accelerates and traditional cloud models struggle to keep pace, it is creating the conditions for a new class of providers purpose-built to deliver AI infrastructure at scale," Castera said.

For IT and infrastructure leaders, the message is that supplier choice is widening. Organisations should look beyond traditional hyperscalers when assessing how to source AI computing, Gartner said, but any move to newer providers should be matched by stronger technical controls and updated financial and risk frameworks.

Neocloud providers could help companies pursue AI projects while retaining tighter oversight of compliance and operational resilience. That may prove attractive in markets where local hosting, regulatory certainty and access to scarce computing capacity are shaping procurement decisions.

"Organisations can leverage neocloud providers to enhance their AI capabilities while maintaining greater control over data sovereignty and regulatory compliance," Castera said. "These providers also enable enterprises to innovate faster by providing more flexible access to high-performance infrastructure tailored to AI workloads."