Banking, retail and information services driving European AI-spending
Europeans will spend $290 billion on artificial intelligence in 2029 which means a compound annual growth rate (CAGR) of 33.7% over 2025–2029. Spending will be driven by banking, retail and software and information services but also from accelerating industries such as healthcare. GenAI are expected to account for nearly 54% of the total market by the end of the period, market research firm International Data Corporation (IDC) says in a forecast.
Enterprises move from AI experimentation to strategic deployment across all major European markets, despite geopolitical tensions and supply chain disruptions, according to the forecast.
European AI Market:
- Total European AI spending by 2029: $290 billion
- Forecast CAGR (2025–2029): 33.7%
- GenAI share of market by end of period: ~54%
- Largest technology segment: Software (58.5% of total spending in 2026)
- Fastest-growing technology segment: Software (42.9% CAGR, 2025–2029)
- Largest industry: Banking (12.5% of market in 2026)
- Fastest-growing industry: Healthcare Provider (39.7% CAGR, 2025–2029)
“Despite geopolitical tensions and supply chain disruptions, the AI market remains dynamic and is rapidly transitioning from experimental to operational and strategic for enterprises,” says Carla La Croce, research manager at IDC.
“Organizations are no longer treating AI as a standalone tool — they are repositioning it as a strategic asset to transform their business models. The emergence of agentic AI tools has made this transformation more urgent and more profound than many anticipated.”
The forecast says that AI platforms and GenAI solutions deliver measurable returns in cost efficiency, customer experience, and risk management. As a result, enterprises are accelerating budget reallocation toward AI, shifting from experimental pilots to mission-critical, multi-agent deployments.
“Software is leading this charge, growing at a 42.9% CAGR with AI Platforms at 52.5%, driven by the explosion of agentic components across industries.”
Industry Trends:
- Banking leads European AI spending (12% of the market), with use cases such as fraud analysis, threat intelligence, contact centers, and customer self-service, with institutions shifting from pilots to mission-critical multi-agent automation and increased focus on FinOps, sovereign cloud, and AI governance.
- Software and information services follow, with most spending on AI infrastructure provisioning to support agentic workloads via PaaS and IaaS.
- Retail ranks third, investing in digital commerce, AI-enabled customer service, planning, personalization, pricing, and supply-chain optimization.
Fast-Growing Industries:
- Healthcare Provider: Fastest-growing industry at 39.7% CAGR (2025–2029) across all five major markets. Primary use case: Clinical Workflow and Resources Optimization.
- Media & Entertainment: 37.3% CAGR, driven by GenAI for content creation, video production, and audience personalization.
- Also, above-average growth: Professional and Personal Services, Utilities, and Life Sciences.
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