European AI Spending to Reach $290 Billion by 2029

European spending on artificial intelligence will reach $290 billion in 2029, growing at a compound annual growth rate (CAGR) of 33.7% over the 2025–2029 forecast period, according to IDC. Spending will be driven by large spending in banking, retail, and software and information services, as well as by accelerating industries such as healthcare.

GenAI solutions are already pervasive across enterprise deployments and are expected to account for nearly 54% of the total market by the end of the period. IDC Worldwide AI and Generative AI Spending Guide forecasts a healthy CAGR through 2029 as enterprises move from AI experimentation to strategic deployment across all major European markets, despite geopolitical tensions and supply chain disruptions.

The study shows that the largest technology segment will be software, accounting for 58.5% of total spending in 2026. Software will also be the fastest-growing technology segment with 42.9% CAGR from 2025 to 2029. The largest industry in AI investment will be banking (12.5% of the market in 2026), while the fastest-growing industry will be healthcare providers (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,” said Carla La Croce, research manager, Data and Analytics, 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.”

IDC says that European AI spending will maintain strong double-digit growth through 2029, sustained by AI Platform expansion, cloud-native development, and industry-specific AI embedding into enterprise strategies. Agentic AI is the key growth catalyst. Risks include regulatory fragmentation from the EU AI Act, persistent AI talent shortages, and cloud cost optimization pressures — all of which will create incremental demand for AI governance and assurance services.