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The cloud industry faces a pivotal year in 2026, driven by increased AI adoption, recent outages revealing infrastructure vulnerabilities, and a rising shift towards private and neocloud services, challenging hyperscaler dominance and emphasising resilience.
The cloud computing landscape in 2026 is poised for significant transformation, driven by accelerating AI integration and the repercussions of recent high-profile outages. According to Forrester’s Predictions 2026 report, the industry will face two pivotal races: hyperscalers striving to build AI-native cloud infrastructure, and enterprises crafting meaningful AI strategies. However, 2025’s cloud downtime incidents, particularly those impacting Amazon Web Services (AWS) and Microsoft Azure, have exposed vulnerabilities in existing infrastructure, forecasting at least two major multiday cloud outages in the year ahead.
The shift in investment by hyperscalers away from legacy x86 and ARM environments towards GPU-centric data centres optimised for AI workloads is intensifying complexity, leaving older infrastructure increasingly fragile. This transition is predicted to increase operational risk, disrupting critical services and compelling enterprise customers to take a more active role in demanding infrastructure renovation from providers. The AWS and Azure outages revealed that recovery processes are hindered by dependency chains and complexity, giving enterprises cause to rethink not only cloud resilience but also control, particularly as they make significant AI commitments.
One notable consequence of this trend is enterprise gravitation towards private AI deployments on private clouds. Rising AI costs, concerns over data lock-in, and operational risk are pushing at least 15% of enterprises to pursue private AI built on private cloud infrastructure in 2026. This move is further stimulated by actions such as Salesforce’s decision to terminate third-party access to the Slack API, restricting customers’ abilities to leverage Slack data across platforms and underscoring the risks tied to public cloud data ecosystems.
Amid this landscape, emerging “neoclouds” like CoreWeave, Lambda, and Nebius are poised to capture a growing market segment, potentially securing around USD 20 billion in revenue in 2026. These GPU-first providers, often backed by NVIDIA and venture capital, are expanding globally and incorporating open-source AI models, orchestration tools, and sovereign AI capabilities targeted at enterprise needs. Their growth, which includes tripled enterprise adoption and regional expansions in Europe and Asia, challenges hyperscaler dominance and forces these major players to reconsider their strategic approaches.
Meanwhile, hyperscalers are responding to recent outages with targeted solutions to improve reliability. AWS, for example, has launched ‘Amazon Route 53 Accelerated Recovery,’ a DNS resilience tool designed to guarantee a 60-minute recovery time objective for public DNS records, following a major DNS outage in October 2025 that disrupted services like Signal, Slack, and Zoom for several hours. Similarly, Microsoft addressed an Azure portal outage caused by configuration changes to its Azure Front Door application delivery network, which had affected services including Office 365, Xbox Live, and global airline operations. Additionally, disruptions in the Red Sea region caused by undersea fibre optic cable cuts increased latency for Azure users, although Microsoft mitigated impact by rerouting traffic.
In response to systemic challenges, Amazon and Google have jointly introduced a new multicloud networking service designed to provide faster, more reliable connectivity between their cloud platforms. This service aims to enable customers to establish private, high-speed network links within minutes rather than the weeks such setups typically require, reflecting efforts to enhance resilience and reduce future disruption risk following AWS’s costly outage in October 2025.
As enterprises continue to expand their adoption of AI technologies, reflected in a Cloudera survey showing 96% of IT leaders planning to broaden their AI agent use within the next year, the imperative for robust, scalable, and secure cloud infrastructure only intensifies. The intertwining of AI-driven innovation with cloud computing infrastructure complexity underlines a future where operational risk and service resilience take centre stage alongside technological advancement.
In summary, 2026 is set to be a year of both challenge and opportunity for cloud computing. The industry faces increased operational fragility due to infrastructure transitions, alongside rising demand for enterprise autonomy and specialised AI cloud services. Hyperscalers, neoclouds, and enterprises alike will need to navigate a shifting landscape where operational resilience, strategic control, and AI-native innovation are inextricably linked.
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- [1] (CDOTrends) – Paragraphs 1, 2, 3, 4, 5, 6, 7, 8
- [2] (Reuters) – Paragraph 6
- [3] (ITPro) – Paragraph 5
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- [5] (AP News) – Paragraph 5
- [6] (Reuters) – Paragraph 4
- [7] (Cloudera) – Paragraph 7
Source: Fuse Wire Services
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