By 2030, neocloud providers will capture 20% of the $267 billion AI cloud market, according to Gartner, Inc., a business and technology insights company. “Neocloud” refers to cloud providers built specifically for AI and high-performance workloads.
The rapid growth of GenAI is creating unprecedented demand for GPU-intensive computing, accelerating investment in localized, high-performance infrastructure and exposing the limitations in traditional cloud models. Neoclouds are challenging the dominance of hyperscalers by focusing on AI-optimized infrastructure.
“While U.S. hyperscalers are launching their own sovereign offerings, a new wave of specialized neocloud providers are gaining significant traction,” said Mr. Enrique Castera, Sr Director Analyst at Gartner. “These neoclouds are differentiated by their focus on AI-optimized 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.”
Increasingly stringent data sovereignty requirements are compelling organizations to seek greater control over where AI data is stored, processed, and governed. These requirements are anchored in established GDPR mandates and the impending August 2026 enforcement of the EU AI Act’s core transparency obligations. Coupled with rising geopolitical concerns, this regulatory pressure is driving enterprises to systematically evaluate their architectures to guarantee localized digital resilience.
Neocloud Providers Gain Traction With AI-Optimized 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,” said Castera. “The AI cloud market is entering a new phase where sovereignty, performance, and infrastructure specialization 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.”
The rise of neocloud providers and sovereign AI infrastructure is reshaping enterprise cloud strategies, requiring organizations to move beyond centralized, global models toward more localized and hybrid architectures.
To capitalize on this shift, I&O and other IT leaders should diversify beyond traditional hyperscalers by evaluating specialized neocloud providers to access high-performance AI infrastructure and limited GPU capacity. At the same time, organizations must adapt their financial and risk management strategies while implementing stronger technical controls to ensure data sovereignty, compliance, and operational resilience. “Organizations can leverage neocloud providers to enhance their AI capabilities while maintaining greater control over data sovereignty and regulatory compliance,” said Castera. “These providers also enable enterprises to innovate faster by providing more flexible access to high-performance infrastructure tailored to AI workloads.”
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