IDC: European AI spending to reach $144bn by 2028
Worldwide AI and Generative AI Spending Guide, European spending in artificial intelligence will reach $144.6 billion in 2028 according to a new forecast from analyst IDC.
Generative AI (GenAI) accounted for nearly a quarter of the total AI market. By 2028, its share is expected to grow to one-third. According to IDC’s 2024 Industry IT & Communications Survey, 87% of European companies plan to allocate up to 30% of their total AI budget to GenAI solutions.
“Generative AI is increasingly requiring more coordinated efforts to be deployed company wide,” said Carla La Croce, research manager, data & analytics at IDC. “GenAI is a top priority for C-suite leaders and opens opportunities to develop more integrated internal strategies among C-suites.”
Software remained the leading technology segment of AI spending, accounting for more than 60% of total AI and GenAI market, of which 44% is represented by AI platforms, that facilitate the development of AI models and applications. Software is also the fastest-growing technology segment (33.5% 2024-2028 compound annual growth rate, with AI platforms growing well above the average) followed by services (27.2% 2024-2028 CAGR) and hardware (24.7% 2024-2028 CAGR). Hardware and services account for a similar share throughout the period, but servers exhibited higher-than-expected growth in 2024, driven by investment by hyperscalers and services providers.
From an industry perspective, the financial services sector is expected to spend the most proportionally on AI solutions (23% of the market in 2025), with banking at the forefront. Strategic digital investments of European banks are aimed at enhancing efficiency, strengthening risk management, and ensuring long-term profitability, and AI specifically provides opportunities to enhance customer experience and improve cybersecurity and consumer protection. Indeed, the biggest use cases in this industry are related to augmented fraud analysis and investigation, augmented threat intelligence and irevention, augmented contact center and field service, and AI-enabled customer service and self service, always with a focus on IT optimisation.
The second largest industry for AI spending is software and information services, where key investments are made for AI infrastructure provisioning, which accounts for more than half of the total spending in this industry. The third biggest industry is retail. Despite economic pressure and unstable consumer sentiment in Europe, AI and GenAI are significantly transforming the European retail sector by enhancing customer experiences with more personalized shopping, and also optimizing operations, and driving sales. Digital commerce is the leading use case, accounting for a third of the market, followed by AI-enabled customer service and self service and augmented planning and logistics.
Fast learners
In terms of the fastest growing industries, media and entertainment are leading the way, each with CAGRs exceeding 35% over the 2024-2028 period, driven by the increasing adoption of GenAI solutions for content creation and personalization or video production. Professional and personal services is likewise expected to also grow well above the average, along with healthcare and life sciences. Leading use cases in healthcare are clinical workflow and resources optimisation, and augmented pharmaceutical research and discovery in life sciences.
IDC predicts significant investments in security and customer-focused areas, from augmented fraud analysis and investigation and augmented threat intelligence and prevention to AI-enabled customer service and self-service, which are more cross-industries applications, but also in AI infrastructure provisioning, which is instead driven by specific industries’ spending (software and information services, telco and retail) in servers.
Another interesting perspective that the Worldwide AI and Generative AI Spending Guide provides is the functional use cases view, which shows where AI and GenAI are used the most across functions. In 2025, customer service, IT operations, AI infrastructure provisioning, and sales were the areas where AI and GenAI are most frequently applied. Functional areas that start from a smaller investment base but are expected to show higher than average growth include human resources, engineering R&D, and marketing.
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