Australian public cloud spend to hit AUD $26.6bn in 2025

Australian organisations are projected to spend nearly AUD $26.6 billion on public cloud services in 2025, reflecting an 18.9% increase from 2024, according to new forecasts from Gartner.

Software-as-a-service (SaaS) is expected to remain the largest category of end-user spending within the Australian public cloud market, reaching almost AUD $13 billion in 2025.

This represents a 15.5% increase from 2024, with ongoing investments in cloud-based application software driven by expanded functionality and the integration of generative artificial intelligence capabilities.

Gartner's analysis indicates that the strongest growth will come from infrastructure-as-a-service (IaaS), where spending is forecast to grow by 24.2% in 2025, rising to AUD $5.6 billion. Platform-as-a-service (PaaS) is also set to see substantial growth of 21.1%, reaching AUD $8.0 billion next year. Collectively, these trends highlight a widespread shift towards cloud platforms among Australian organisations, with all cloud segments expected to experience double-digit growth over the period.

Adrian Wong, Director Analyst at Gartner, said, "Public cloud services continue to be a critical driver of innovation across Australian organisations this year. As momentum continues, many organisations are facing higher than expected costs and complex management issues, especially when it comes to scaling AI initiatives. To deliver value, CIOs need a sharper cloud strategy, one that prioritises return on investment but also keeps pace with rapid technology shifts."

Details from Gartner's annual global survey, which encompassed 3,186 CIOs and technology executives, including 109 from Australia and New Zealand, show that 83% of CIOs in the Australia and New Zealand region placed cloud platforms among their top technology investments for 2025, ranking just behind cybersecurity and data analytics.

Breaking down the figures for 2025, cloud application infrastructure services (PaaS) are forecast to increase from AUD $6.6 billion in 2024 to AUD $8.0 billion. Cloud desktop-as-a-service (DaaS) spending is set to rise from AUD $132 million to AUD $146 million, while total spending across all cloud segments is projected to climb from AUD $22.4 billion in 2024 to AUD $26.6 billion in 2025.

Hardeep Singh, Principal Analyst at Gartner, said, "Legacy modernisation, cost optimisation, and the adoption of AI-driven workloads continue to drive strong demand for cloud services. These factors are expected to sustain cloud growth, particularly as enterprises seek agility and scalability amid uncertainty this year, as trade restrictions and tariffs dampen business confidence and introduce greater unpredictability into short-term planning."

Singh also addressed how external pressures could influence future spending, noting, "While the situation continues to change, a lot of cloud spend is tied to multi-year annuity contracts with providers. Tariffs are more likely to affect input costs and disrupt supply chains for new or incremental cloud spending, rather than existing usage. This may lead to cautious spending by providers and delays in data centre expansions, prompting marginal adjustments to cloud spending projections. Despite this, the cloud market's underlying momentum remains intact."

Gartner's report suggests that Australian enterprises are moving to further modernise their IT estates, invest in scalable infrastructure, and leverage generative artificial intelligence tools while navigating increased complexity and shifting economic conditions.

The forecasted growth rates and spending patterns point towards a continued prioritisation of public cloud services, both as a mechanism to reinforce business agility and an enabler for digital transformation initiatives across Australian industries.