A new report from [Broadcom Inc.](https://www.broadcom.com/) indicates a significant shift among global enterprises, which are increasingly deploying artificial intelligence (AI) workloads for production in private cloud environments. The “Private Cloud Outlook 2026” report highlights that the experimental phase of AI adoption is largely concluding, with organizations now focused on scalable and secure deployments.

The study reveals that the shift is driven by concerns over costs, operational complexity, and the need for greater control, factors that public cloud environments are reportedly failing to address effectively for large-scale production AI.

Production AI: Key Findings from the Outlook

The Broadcom report, based on a survey of 1,800 senior IT decision-makers, presents several notable trends:

* **Production AI Shift:** Globally, 56% of organizations are currently running or planning to run AI inference and production AI on private cloud infrastructure. This marks a 15 percentage point decline in public cloud use for the same workloads, dropping from 56% last year to 41% in 2026.
* **Workload Repatriation:** Eighty-three percent of enterprises are considering moving workloads from public to private cloud, with 50% having already done so.
* **Cost Concerns Escalating:** Cost has emerged as the primary concern regarding public cloud, cited by 31% of IT leaders, up from 26% in 2025. Furthermore, 97% of IT leaders believe some public cloud spending is wasted, and 52% estimate this waste exceeds 25% of their total public cloud budget. Cost predictability is now the second-largest driver for repatriation, mentioned by 39% of organizations.
* **Security and Control Demands:** AI is driving new requirements for data protection and privacy (37%), alongside security and control (36%).
* **Geopolitical Influence:** Four out of five IT leaders report that geopolitics is influencing their IT strategy and operations. Data sovereignty and residency requirements (54%) have surpassed jurisdiction-specific compliance (51%) as the leading geopolitical factor in infrastructure decisions.

Regional Trends in Asia Pacific and Japan

In the Asia Pacific and Japan (APJ) region, the report notes a particularly pronounced shift. Eighty-two percent of organizations in APJ have considered repatriating workloads from public to private cloud, and 54% have already initiated this process. Top drivers for this repatriation include security and compliance, infrastructure cost predictability, and performance.

Sylvain Cazard, President, Asia Pacific, Japan & Middle East at Broadcom, commented on the regional developments, stating, “Across Asia Pacific and Japan, organizations are moving beyond AI experimentation and focusing on production deployment. As AI workloads scale, enterprises are prioritizing security, cost predictability, performance, and operational control, factors that are accelerating the shift towards private cloud.”

The Drivers Behind the Private Cloud Momentum

The report identifies several critical factors contributing to the preference for private cloud for production AI:

Rising Cost and Waste in Public Cloud

The study underscores a growing dissatisfaction with the economic model of public cloud for large-scale AI operations. Prashanth Shenoy, vice president of marketing, VMware Cloud Foundation Division at Broadcom, emphasized, “As enterprises move from pilots to running AI at production scale, infrastructure and operational costs spike, security gaps surface, and complexity compounds. The research is clear: enterprises increasingly prefer private cloud for production AI.”

Sixty-two percent of IT leaders expressed significant concern regarding the infrastructure costs associated with running generative and agentic AI.

Data Sovereignty and Security Mandates

The increasing volume of data generated by AI applications, coupled with complex cross-border data governance requirements, has elevated data sovereignty to a board-level priority. Industries with stringent security and compliance needs, such as financial services, the public sector, and healthcare, are at the forefront of this trend. They are increasingly opting for private cloud infrastructure to maintain greater control over sensitive data.

Investment Outlook

Against this backdrop, investment in private cloud is accelerating. Private cloud spend intent is growing at twice the rate of public cloud, increasing by 21 points versus 10 points over a three-year outlook. Additionally, 58% of IT leaders now prioritize building new workloads on private cloud, an increase from 53% a year prior.

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Survey Methodology

The Private Cloud Outlook 2026 is based on a global survey conducted by Radius Tech in partnership with Broadcom. The survey was conducted from February to March 2026 and included 1,800 senior IT decision-makers from enterprise organizations (1,000 or more employees) across North America, Europe, and Asia-Pacific. The report was published in June 2026.