Dive Brief:
- Accelerating compute demand for AI workloads and rising regulatory concerns are leading enterprises to consider cloud options beyond traditional hyperscalers. By 2030, Gartner predicts that neocloud providers, which offer AI-optimized infrastructure, will earn 20% of the competitive $267 billion AI cloud market. AWS, Microsoft and Google account for the greatest shares of the cloud market overall.
- Neocloud providers’ specialized focus on AI and supporting high-performance workloads positions the cloud companies as an alternative to hyperscalers due to rising demand for GPU-intensive compute, Enrique Castera, senior director analyst at Gartner, said in a press release. Data sovereignty requirements imposed by other countries also make neocloud providers’ strong technical controls for data appealing.
- “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.
Dive Insight:
Neocloud providers’ acceleration toward a greater share of the AI cloud market comes as enterprises, hyperscalers and frontier model providers alike set out to lock down the necessary compute for AI workloads.
Neocloud revenues reached $9 billion in Q4 2025, up 223% year over year, as demand for GPU compute outpaced hyperscaler capacity, according to an April report from Synergy Research Group. Neocloud provider Nebius last year partnered with Microsoft to deliver AI infrastructure. Meanwhile, CoreWeave entered a multiyear agreement with large language model provider Anthropic in April to power the Claude family of AI models.
As neoclouds partner with hyperscalers and LLM providers to provide compute, they’re also becoming an option for enterprises looking to diversify their cloud portfolio and support AI projects. As AI scales across the enterprise, CIOs are thinking strategically about different options for their AI workloads.
Tech leaders should prioritize hybrid architectures and evaluate neocloud providers’ offerings, which can enable greater access to compute that supports high-performance AI workloads, as well as strong technical controls for ensuring data sovereignty, Castera said.
Companies operating globally face data sovereignty requirements imposed by GDPR mandates and the EU AI Act, and are becoming more concerned with where AI data is stored and processed, according to Gartner. Rising geopolitical concerns have also prompted enterprises to consider local digital resilience.
Global sovereign cloud spend is expected to increase 35.6% this year, according to a separate Gartner report.
“Organizations 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.”
