European AI Spending to Reach $290 Billion by 2029, Driven by Banking, Software, and Agentic AI Adoption – IDC – April 14, 2026.

According to a new forecast from the International Data Corporation (IDC) Worldwide AI and Generative AI Spending Guide, 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. Spending will be driven by large spending from banking, retail and software and information services, but also from accelerating industries such as healthcare. Generative AI (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.

What is happening in the European AI and GenAI market in 2026?

Carla La Croce, research manager, Data and Analytics, IDC

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.

European AI Market at a Glance

• 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,” 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.”

Market Dynamics & Outlook

Why is European AI spending surging despite macro headwinds?

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.

What is IDC’s outlook for the European AI market?

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.

Industry Trends: Where AI Investment Is Concentrated

• 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.

To learn more, visit: www.idc.com