Europe Artificial Intelligence (AI) Market

Europe Artificial Intelligence Market Size (2024 to 2029)

The Europe AI market size is expected to be worth USD 414.44 billion by 2029 from USD 87.84 billion in 2024, growing at a CAGR of 36.38% during the forecast period.

Europe Artificial Intelligence Market Drivers

The rising investments by the European Union and other countries in AI is driving the European AI market forward.

European countries are establishing legal frameworks and increasing investments in technology at a rapid pace. Regulators are concerned about possible risks even as they work to boost innovation including generative AI like ChatGPT are attracting the public's interest. Europe aims to find a middle ground between the "wild west" of AI and authoritarian state rule. The growing demand for AI and ML in software development services is propelling the Europe artificial intelligence market. This trend is fueled by increasing awareness of the potential that AI and ML provide and a strong desire by businesses and governments to take advantage of these opportunities. European companies are exploring the use of AI and ML technologies to address their challenges in filling vacancies. Furthermore, there is a shortage of AI and ML developers in Europe, so they are searching for outsourcing collaborators to fulfil the demand.

Europe has already introduced the AI Act and member nations like Germany and Spain are establishing regulating groups and sponsoring research. Likewise, the UK has also proposed comprehensive legislation. All these developments in the region are boosting the Europe artificial intelligence market share. Technical advantages will provide further opportunities to the companies in the market. Even though artificial general intelligence (AGI) is in its early phases but the developments in deep learning, natural language processing and robotics have the potential to progress the field and have a significant impact on society.

Europe Artificial Intelligence Market Restraints

The lack of skilled AI professionals is hampering the growth of the Europe artificial intelligence market.

The research has highlighted the shortage of expertise in artificial intelligence which is hindering progress. Spain and Germany offer 42% training to tech employees on programming languages, data analysis and software engineering. However, the UK lags with only 32 percent employees receive this training and the other 27 percent concentrating on software engineering which is crucial AI related competency. One of the major challenges in front of Europe artificial intelligence market is the falling productivity of the region. For this, a special panel on European competitiveness was created by president of European Commission to evaluate this decline and how it can stop this trend and move towards economic growth. Another factor limiting the growth of the market is slow adoption and risk averse culture. Small and medium enterprises tend to be less willing to take risks which slows down the adoption of AI technology when compared to Chinese and United States.

Impact of COVID-19 on the Europe AI Market

Countries like UK, France, Germany, Spain, and Italy are among the most affected nations due to COVID-19 which led to a sharp drop in the Europe artificial intelligence market growth rate. Companies halted their operations and drastically cut back other activities which left them in severe financial straits. The demand for AI based healthcare solutions increased during the pandemic. Prompting issues like contact tracking, vaccine development, disease prediction, and medical resource allocation saw a rapid application of AI solutions.

REPORT COVERAGE

This research report on the European artificial intelligence (AI) market has been segmented and sub-segmented into the following categories.

Europe Artificial Intelligence Market Analysis By Offering

• Hardware

• Software

• Services

Based on offering, the software segment is leading the Europe artificial intelligence market. The high demand for AI solutions is driving the growth of the software segment In the European AI market. In Europe, the need for AI-powered solutions is increasing in many industries, including manufacturing, retail, healthcare and finance. The primary reason for this trend is the requirement for advanced AI software frameworks and tools.

Europe Artificial Intelligence Market Analysis By Technology

• Machine Learning

• Natural Language Processing

• Computer Vision

• Context Awareness

Based on technology, the machine learning segment is flourishing in Europe artificial intelligence market. Large enterprises dominated in terms of AI usage when compared to small and medium enterprises. Currently, close to 75 percent of European businesses are using AI technology. The primary cause of this is introduction of ChatGPT in 2022.

Europe Artificial Intelligence (AI) Market Analysis By Business Function

• Supply Chain Management

• Finance

• Law

• Human Resources

• Marketing & Sales

• Service & Operations

• Security

Based on business function, the services & operations segment is estimated to thrive during the forecast period in the Europe AI market. The increased demand for operational efficiency is one of the main factors propelling this segment. European businesses are utilizing AI solutions like predictive maintenance, automated workflows, and data-driven decision-making to enhance operational efficiency, reduce costs, and boost productivity.

Europe Artificial Intelligence (AI) Market Analysis By End Use

• Information Technology

• BFSI

• Healthcare

• Automotive

• Retail & E-commerce

• Advertising & Media

• Manufacturing

• Transportation & Logistics

• Military & Defense

• Agriculture

• Energy & Utilities

• Telecommunication

• Others

Based on end-use, the Healthcare segment is projected to elevate with a considerable growth rate during the forecast period in the European AI market. The ageing population and growing healthcare demand are taking the segment forward. AI has huge potential to increase accessibility, efficiency and diagnosis accuracy in considering the ageing population and rising demand for high quality healthcare. Other factors boosting the segment are drug discovery and development, robot assisted surgery and medical imaging analysis.

Europe Artificial Intelligence (AI) Market Analysis By Region

• UK

• France

• Spain

• Germany

• Italy

• Russia

• Sweden

• Denmark

• Switzerland

• Netherlands

• Turkey

• Czech Republic

• Rest of Europe

UK is not far behind in Europe artificial intelligence market and is expected to advance further in the coming years. It doubled the investments in AI and surpassed France, Germany and the rest of Europe put together. After China and the United States, the UK has the third largest AI market. UK provided more than 1,3 billion dollars under the National AI Strategy Action Plan of 2022 and 2021.

Germany is anticipated to accelerate at a significant growth rate in the coming years. A comprehensive AI Action Plan which will increase funding for AI research and talent development was announced by Germany. The Federal Ministry of Education and Research will commit nearly 1.6 billion euros to artificial intelligence (AI), increasing funding from 17.4 million euros in 2017 to a projected 483 million euros in 2024.

Spain is estimated to achieve a higher CAGR during the forecast period. Recently, the first artificial intelligence regulatory organisation in the European Union was established by Spain called the Spanish Agency for the Supervision of Artificial Intelligence (AESIA), which is boosting the market share in the country. With a broad goal to monitor and evaluate the effects of artificial intelligence on Spanish society. AESIA is led by a diverse team of technological specialists, attorneys, and humanities professors. It will design procedures for risk assessment, audit data practices and algorithms, and set legal guidelines for businesses when developing and implementing AI systems.

France is one of the leading countries in the Europe artificial intelligence market. The rise in government investments is driving the demand for AI in the country. For instance, it announced plans in June to invest an additional 40 million Euros to create an open “digital common” for generative AI initiatives built in France. The goal of this initiative is to draw in a substantial amount of capital from private investors.

Italy is projected to propel further at a faster pace in the future. The prevalence of chronic illnesses, the need for accurate diagnosis and the use of cutting-edge technology have all contributed to region’s growing AI in diagnostics market where both established businesses and start-ups are implementing AI-based solutions.

KEY MARKET PLAYERS

Companies playing a noteworthy role in the Europe AI market include Microsoft Corporation, Google Inc., IBM, Oracle Corporation, Apple Inc., Amazon Web Services, SAP, Salesforce, Cisco, Meta (Facebook), Intel Corp, H2O.ai., Hewlett Packard Enterprise, Siemens AG, Huawei, NVIDIA, OpenAI, SAS Institute, Baidu, Alibaba Cloud, AIBrain, Lumen5, Advanced Micro Devices, Iris.ai AS, Lifegraph, Sensely, Inc., and DiDi Global.

RECENT HAPPENINS IN THE MARKET

• In October 2023, the UiPath Automation Cloud platform was introduced by UiPath to manage and grow RPA deployments throughout the cloud.

• In September 2023, OVHcloud signed an agreement with the European Commission to create AI solutions for combating climate change.