Australian AI cloud spending set to jump to AUD $1.5bn

Australian organisations are projected to spend AUD $946 million on AI-optimised infrastructure as a service in 2026, up 128.4% from 2025, according to Gartner.

Spending is expected to rise further to AUD $1.5 billion in 2027 as businesses continue buying cloud infrastructure for AI use across applications and workflows.

The figures point to a sharp increase in cloud budgets tied specifically to AI workloads, with Australia outpacing the global growth rate forecast for the same segment in 2026. Worldwide spending on AI-optimised IaaS is projected to grow 96% to USD $42 billion, before reaching USD $66 billion in 2027.

Adrian Wong, Director Analyst at Gartner, said Australian organisations are changing how they allocate cloud spending as AI projects move into broader use.

"AI‐driven demand for high‐performance cloud infrastructure is changing how Australian organisations are prioritising cloud spending this year. While AI compute demands are driving rapid IaaS growth, the ultimate goal for Australian organisations is business value," said Wong.

Global demand

Across the broader cloud market, Gartner forecasts total worldwide IaaS spending of USD $287.3 billion in 2026, up from USD $222.2 billion in 2025. That total is expected to climb to USD $359.9 billion in 2027.

AI-optimised services remain a small share of the overall IaaS market by value, but they are expanding much faster than the wider category. Gartner's figures show global AI-optimised IaaS spending rising from USD $21.5 billion in 2025 to USD $42.3 billion in 2026 and USD $66.1 billion in 2027.

The global outlook reflects demand for infrastructure used to train large language models and run AI services inside business systems. It is also being shaped by a shift from experimental model development to production deployment in customer-facing and operational environments.

Hardeep Singh, Senior Principal Research Analyst at Gartner, linked that change to rising ongoing compute needs.

"This growth is driven by continued demand for infrastructure to support large language model (LLM) training and the rapid operationalisation of AI across enterprise applications and workflows," said Singh.

Inference shift

One of the clearest market shifts is the growing share of spending tied to inference rather than training. Gartner forecasts global spending on inference workloads will reach USD $23.3 billion in 2026, compared with USD $19 billion for training workloads.

That would make 2026 the point at which inference becomes the larger share of AI-optimised IaaS spending. Gartner expects inference to account for 55% of that spending in 2026 and 59% in 2027.

The shift matters because inference workloads are tied to AI systems running continuously in day-to-day business operations, rather than being built or refined in occasional bursts. As companies deploy fine-tuned and domain-specific models more widely, demand for constant processing is reshaping cloud purchasing decisions.

Singh said this transition is changing how organisations consume cloud services.

"As organisations shift from model development to production-scale deployment, fine-tuned and domain-specific models (DSMs) are increasingly integrated into customer-facing and operational systems, requiring continuous, real-time execution rather than periodic training," said Singh. "This shift is accelerating cloud consumption patterns and creating sustained demand for AI-optimised infrastructure."

For Australia, the forecast suggests organisations are moving quickly to secure the computing resources needed for these deployments. The projected rise from 2025 to 2027 indicates AI-related cloud infrastructure is becoming a larger technology spending line item, even as businesses weigh that investment against expected commercial returns.

The Australian estimate also points to faster near-term expansion than the global market average, underlining the intensity of demand among local organisations adopting AI across internal workflows and customer systems.

Worldwide AI-optimised IaaS spending is forecast at USD $42 billion in 2026 and USD $66 billion in 2027, while Australian spending is projected at AUD $946 million in 2026 and AUD $1.5 billion in 2027.