For years, the standard advice to US enterprises was straightforward: move everything to the cloud, and do it fast. A new ISG report suggests that playbook is quietly falling out of favor, and AI is the reason why.
According to ISG’s 2026 Provider Lens report on private and hybrid cloud services, US companies are increasingly pulling back from full cloud migrations and instead building hybrid setups that mix on-premises infrastructure with cloud capacity. The shift traces back to AI workloads, which often need specialized GPU hardware, tight data governance, and compliance controls that a pure public cloud environment doesn’t always handle well, especially in industries like banking, healthcare, and government, where regulators care deeply about where data physically lives.
“AI is forcing enterprises to rethink their infrastructure footprint as a foundational business enabler rather than an isolated back-office function,” said Anay Nawathe, ISG’s cloud delivery lead for the Americas. He described companies investing in hybrid models that improve day-to-day operations while quietly preparing for heavier AI use, backed by better monitoring, governance, and cost controls.
Rather than ripping out existing systems, most organizations are modernizing gradually, layering automation and AI-driven operations tools onto infrastructure they already run. These tools cut down on manual troubleshooting and speed up how quickly IT teams catch and fix problems in increasingly complicated hybrid environments. Companies are also pairing that automation with financial tracking tools that show, in real time, where cloud spending is actually going, since AI workloads can get expensive fast without anyone noticing until the bill arrives.
Vendor flexibility keeps coming up as a priority too. Enterprises want infrastructure that plays nicely across multiple cloud providers rather than locking them into one vendor’s ecosystem, and they’re increasingly expecting built-in disaster recovery and business continuity features as standard, not an upsell.
“Providers that integrate automation, AI-enabled operations and lifecycle services can help clients modernize hybrid environments to improve operational efficiencies,” said Shashank Rajmane, ISG’s principal analyst and the report’s lead author.
The report evaluated 68 providers across the space, naming NTT DATA a leader in three separate categories, while Kyndryl, Rackspace, and Unisys each earned leader status in two.
