Pulumi Adds Native HCL Support and Terraform State Management in Direct Challenge to HashiCorp

Pulumi announced three capabilities in late 2025 and early 2026 that directly challenge HashiCorp's commercial position in the infrastructure-as-code market. Native HCL support, a Terraform-compatible state backend, and a financial credit program for migrating HashiCorp customers represent the most aggressive competitive positioning Pulumi has taken since its founding.

HCL as a First-Class Language

The most technically significant announcement is that HCL — HashiCorp Configuration Language, the native language of Terraform — now runs as a first-class language in the Pulumi CLI. Previously, teams migrating from Terraform to Pulumi had to convert their HCL code to one of Pulumi's supported programming languages (TypeScript, Python, Go, C#, Java, or YAML). The conversion process, while supported by automated tooling, introduced friction and risk that discouraged migration.

With native HCL support, existing Terraform configurations can be executed directly by the Pulumi engine without any code conversion. The Pulumi CLI interprets HCL natively, provisions resources through Pulumi's provider ecosystem, and manages state through Pulumi's state backend. This eliminates the primary migration barrier: teams can adopt Pulumi's platform features — including its state management, policy engine, and collaboration tools — without rewriting a single line of their infrastructure code.

Terraform State Backend

Pulumi Cloud is now available as a state backend for Terraform and OpenTofu workspaces. This positions Pulumi as a direct competitor to Terraform Cloud (now part of IBM's HCP platform) for the state management and collaboration features that many teams rely on. Teams using Terraform CLI with remote state can point their state backend to Pulumi Cloud, gaining access to Pulumi's state locking, audit logging, and collaboration features while continuing to use Terraform as their execution engine.

Financial Migration Incentive

Pulumi is offering a financial credit program that allows customers to apply the remaining value of their HashiCorp contracts toward Pulumi usage. This directly targets organizations that are evaluating their HashiCorp relationship following IBM's acquisition of HashiCorp and the associated licensing changes that prompted the OpenTofu fork. The credit program reduces the financial switching cost for organizations with existing multi-year HashiCorp commitments.

The combined effect of these three announcements is a migration path that removes the three primary barriers to switching from Terraform: code rewrite cost (eliminated by native HCL), state migration risk (mitigated by the state backend), and financial switching cost (addressed by the credit program). The IaC market in 2026 now features three competing platforms — HashiCorp Terraform, OpenTofu, and Pulumi — each with distinct licensing models and technical approaches, forcing infrastructure teams to make deliberate toolchain decisions.