MILANO, March 17, 2025 — According to a new forecast from the International Data Corporation (IDC) Worldwide AI and Generative AI Spending Guide, European spending in artificial intelligence will reach $144.6 billion in 2028, based on a compound annual growth rate (CAGR) of 30.3% over the 2024-2028 forecast period.
Generative AI (GenAI) is gaining momentum in Europe, currently accounting for nearly a fourth 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,” says Carla La Croce, research manager, Data and 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 remains the leading technology segment of artificial intelligence 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 CAGR, 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 optimization. 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.
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 optimization, and augmented pharmaceutical research and discovery in life sciences.
IDC expects 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 are 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.
About IDC Spending Guides
IDC’s Spending Guides provide a granular view of key technology markets from a regional, vertical industry, use case, buyer, and technology perspective. The spending guides are delivered via pivot table format or custom query tool, allowing the user to easily extract meaningful information about each market by viewing data trends and relationships.
For more information about IDC’s Spending Guides, please contact Monika Kumar at mkumar@idc.com.
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About IDC
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,300 analysts worldwide, IDC offers global, regional, and local expertise on technology, IT benchmarking and sourcing, and industry opportunities and trends in over 110 countries. IDC’s analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly owned subsidiary of International Data Group (IDG), the world’s leading tech media, data, and marketing services company. To learn more about IDC in Europe, please visit https://www.idc.com/eu. Follow IDC Europe on X at @IDC EMEA and LinkedIn. Subscribe to the European IDC Blog for industry news and insights.