When it comes to public cloud in 2024, there’s no denying that AI has dominated the conversation, providing cloud customers with a variety of new options. In fact, a year ago, we predicted that AI would rattle some of the biggest cloud players this year, and it certainly did (we’ll do a deep dive on our 2024 predictions’ accuracy in a separate blog early next year).

In 2025, public cloud AI offerings will continue to expand and mature, but private cloud will also thrive in the year ahead due to some complex industry dynamics that started in 2024 and will play out in 2025. Some persistent challenges will impact the public cloud market, such as supply shortages, quality concerns, and data security, pushing new behaviors for vendors and users alike. Hyperscalers will invest in AI model quality and increased GPU firepower to drive the new AI services, but at the cost of some sustainability goals. More users will seek out AI capabilities in the private cloud domain.

For the cloud market in 2025, we predict that:

• Integrated RAG services will become the hottest new cloud services. In the past year, cloud players sought differentiation through AI infrastructure and foundation models. But FMs bring their own issues, including hallucinations and accuracy concerns. In 2025, we predict that cloud players will shift their focus to retrieval-augmented generation (RAG) services as a form of differentiation. In fact, in the year ahead, every major hyperscaler will launch RAG-related solutions to build accuracy into their generative AI services.
• Private cloud will gain momentum with VMware alternatives. On-premises computing (by any name) is on the rise again as companies solve sovereignty, cost, and data ownership/security challenges, but newcomers and private cloud expanders likely won’t look to expand business with dominant private cloud player VMware given the bundling and pricing changes announced in the first half of 2024. As a result, Forrester predicts that in 2025 most major public cloud providers will increase investments in private cloud, and offerings like Nutanix and open-source projects like OpenStack will see increased user interest.
• Platform specialists will squeeze out native cloud platforms’ security capabilities. Vendors such as Cisco, Fortinet, Palo Alto Networks, and Wiz have made significant investment into their cloud security solutions with cloud security posture management, cloud infrastructure entitlement management, infrastructure-as-code scanning, and container security functionality sets, as well as centralized and generative AI-supported policy management, detection, response, and reporting. In 2025, hyperscalers such as AWS, Azure, and Google will continue to build their native cloud workload security (CWS) capabilities, but the competition from standalone solutions will be a formidable threat. By the end of 2025, 60% or fewer cloud customers will prefer the hyperscaler platform’s native CWS capabilities, while the remaining 40% will use a platform specialist CWS vendor.

Forrester clients can read our full Predictions 2025: Cloud Computing report to get more detail about each of these predictions and read additional predictions. Set up a Forrester guidance session to discuss these predictions or plan out your 2025 cloud strategy.

If you aren’t yet a client, you can download our complimentary Predictions guide, which covers more of our top technology and security predictions for 2025. Get additional complimentary resources, including webinars, on the Predictions 2025 hub.

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