Curiosity in sovereign cloud companies has adopted a bumpy trajectory over the previous decade, each within the public sector and personal enterprises.
Within the early days of cloud computing, worry, uncertainty and doubt reigned supreme in boardrooms and IT departments, as CIOs and IT decision-makers grappled with the notion of migrating workloads off bodily {hardware}, housed in privately owned datacentres, to multi-tenanted public clouds, operated by abroad tech companies.
The scenario fuelled curiosity in non-public cloud deployments, as they allowed enterprise IT departments to faucet into the advantages of public cloud whereas sustaining a higher diploma of management over the infrastructure and atmosphere internet hosting their workloads.
Round this time, the home cloud markets in lots of international locations, together with the UK, started to flourish as suppliers emerged that specialised within the provision of regionally hosted, sovereign public cloud companies.
These setups offered UK-based enterprise IT patrons, for instance, with assurances that their functions and workloads could be hosted in UK-based datacentres, whose operations could be ruled by UK legal guidelines and rules, with no entry permitted by abroad governments or entities.
In time, enterprises turned extra comfy with utilizing cloud applied sciences supplied by US tech giants, reminiscent of Amazon Internet Providers, Microsoft and Salesforce.
Nonetheless, a level of trepidation concerning their utilization persevered till these companies opened their very own UK datacentres between 2014 and 2016, which supplied customers entry to regionally hosted variations of their companies.
As documented by Pc Weekly, this growth prompted a downturn in demand for sovereign cloud companies from home UK cloud suppliers, which in flip led to some going out of enterprise and others being acquired, or having to pivot their enterprise fashions accordingly.
Rising considerations over sovereignty
Through the years, the hyperscale cloud suppliers have continued to see demand for his or her UK-hosted companies develop, regardless of rising considerations about how a lot of the UK’s information is now being hosted in cloud environments operated by abroad cloud companies.
Such considerations have been heightened extra lately by revelations, reminiscent of these uncovered by Pc Weekly, about Microsoft’s incapability to ensure the sovereignty of policing and different types of public sector information saved inside its Azure public cloud platform.
Geopolitical considerations are additionally focusing the minds of CIOs and IT decision-makers on ensuring the cloud platforms they entrust with their information will hold it in-country and guarded by home legal guidelines and rules, says Oliver Hessel, head of massive information merchandise and cloud at internet hosting supplier Ionos SE.
“Commerce tensions between the US and China and coverage shifts following US elections are creating provide chain uncertainties, notably for AI {hardware},” Hessel tells Pc Weekly.
“European companies are responding with multicloud and diversification methods, lowering reliance on non-European suppliers whereas mitigating danger, [and] digital sovereignty is more and more tied to resilience. We’re additionally seeing cyber safety considerations reinforce this pattern,” he provides.
In opposition to this backdrop, Hessel says internet hosting important workloads regionally and partnering with sovereign suppliers has “grow to be a strategic safeguard” for lots of enterprises already.
And forecast information from IT analyst home IDC, shared in its FutureScape 2026 analysis, suggests this pattern is ready to persist for some years to come back.
IT market responds to rising digital sovereignty calls for
The hyperscale cloud giants have responded to this pattern by asserting and rolling out sovereign cloud areas, able to offering customers with entry to variations of their companies whose operations are ruled by native legal guidelines and rules.
In the meantime, over the course of 2025, a brand new class of cloud firm emerged, targeted on the availability of extra area of interest, sovereign cloud workloads.
The scaling of AI inside enterprises is turning into a significant driver of sovereignty. As organisations grow to be extra formidable, many will discover that their current infrastructure architectures can’t present the assurances required for delicate or regulated workloads Kate Hanaghan, TechMarketView
Often known as neocloud suppliers, main gamers inside this rising class of tech suppliers embody the likes of Nscale, CoreWeave and Carbon3ai, to call a number of.
What these companies have in widespread is a give attention to offering sovereign infrastructure that can be utilized to host high-performance computing (HPC) and synthetic intelligence (AI) workloads.
In response to IT market watcher Forrester, 2026 is ready to be the 12 months governments begin to refine their AI methods, with the corporate predicting that many will take a “tech nationalism” stance when deciding on potential AI suppliers. This implies that many of those neocloud suppliers shall be well-positioned to faucet into this pattern.
“International digital norms will give technique to tech nationalism in terms of AI fashions,” Sam Higgins, vice-president and principal analyst at Forrester, writes in a weblog submit, outlining his tech predictions for 2026. “Amid geoeconomic fractures and AI disruption, 2026 is the 12 months governments select domestic-first, from mannequin choice to internet hosting, rewriting AI procurement and compliance within the course of.”
There are additionally numerous items of laws coming down the road, together with the EU AI Act, that every one sign a rising choice for sovereign AI companies, he continues.
“We [Forrester] count on that half of the G20 will mandate domestically tuned AI fashions for public sector companies,” says Higgins. “For companies providing options to the general public sector, put together for this inevitability by enterprise a radical stock of your mannequin provenance together with in-market internet hosting choices for inferencing, or danger exclusion from future public sector alternatives.”
An identical set of preferences for sovereign AI companies can also be anticipated to play out within the non-public sector in 2026, says Kate Hanaghan, chief analysis officer at IT analyst home TechMarketView, as enterprises come to grasp their current infrastructure could now not meet their wants.
“The scaling of AI inside enterprises is turning into a significant driver of sovereignty,” she says. “As organisations grow to be extra formidable, many will discover that their current infrastructure architectures can’t present the assurances required for delicate or regulated workloads.”
She continues: “In consequence, considerations are shifting past information location and into the operational and digital layers, the place the main focus should transfer to governing the folks, processes and expertise elements – such because the AI mannequin, information pipelines and underlying infrastructure – that affect how the system behaves.”
As is the case within the public sector, regulatory stress seems set to speed up the adoption of sovereign AI companies too, she provides.
“In monetary companies, there are considerations a few focus on a small variety of cloud suppliers. In the meantime, operators of important nationwide infrastructure (CNI) will face rising scrutiny round resilience and information integrity. We count on this to bolster the function of native assurance, together with the suitable use of UK-based internet hosting suppliers,” Hanaghan provides.
Chatting with Pc Weekly, Bjorn Hovland, chief working officer at AI infrastructure firm CIQ, says that along with regulatory and geopolitical pressures, there are additionally financial explanation why governments and enterprises will present a choice for sovereign AI in 2026.
“If a rustic outsources its capability to handle its personal computing infrastructure, a overseas nation or firm may simply shut down key capabilities and infrastructure sooner or later,” warns Hovland.
If AI is the way forward for financial development, international locations that can’t run their very own AI workloads danger being left behind and dropping jobs/development to extra technologically superior friends Bjorn Hovland, CIQ
“There’s additionally a transparent financial benefit. If AI is the way forward for financial development, international locations that can’t run their very own AI workloads danger being left behind and dropping jobs/development to extra technologically superior friends.”
He continues: “As information continues to develop in worth, governments are recognising that an incapability to safe, handle and use the info generated by their international locations is a significant strategic vulnerability.”
Neocloud suppliers poised to reply
The UK authorities’s championing of UK-headquartered sovereign AI infrastructure supplier Nscale, following the discharge of its January 2025 AI alternatives motion plan coverage paper, is smart in opposition to such a backdrop.
Chatting with Pc Weekly, the corporate’s senior vice-president, Imran Shafi, says that whereas the analyst neighborhood is predicting an uptick in demand for sovereign AI companies this 12 months, work is already underway throughout Europe to fulfill this demand in 2026.
“Sovereign AI is more and more about real-world implementation, somewhat than idea, and international locations throughout Europe are transferring past technique paperwork and beginning to construct the bodily infrastructure they’ll have to run important AI programs on their very own phrases,” says Shafi.
“Which means higher demand for AI datacentres, extra readability round operational sovereignty, and deeper collaboration with neighbours.”
Even so, Shafi is of the view that not each nation may have the means, want or want to construct out their very own sovereign AI infrastructure, which may see enterprises utilizing “federated” setups to plug any gaps.
In such preparations, AI fashions are skilled collaboratively throughout a number of, decentralised, geographical areas, with out the uncooked information itself needing to be migrated.
“This ensures delicate workloads keep native, whereas energy-intensive necessities shift to areas just like the Nordics or Iberia … [and this means] with the precise funding in infrastructure and coordinated policy-making, Europe can keep aggressive with out compromising on values like privateness, sustainability and transparency.”
It’s the view of INQ’s Hovland, although, that it received’t simply be the neocloud suppliers that profit most from enterprises and governments displaying a choice for AI sovereign companies in 2026.
“The 2 greatest winners of this pattern are firms that may pivot to sovereign options rapidly, particularly hyperscalers, and corporations which might be constructing sovereign options by design,” he says.
“Nonetheless, these are sometimes advanced technical options, so the winners shall be enterprises which have anticipated this pattern and have been constructing these options for a while.”
