Europe's technology spending is expected to reach USD $1.3 trillion in 2026, growing 8.2% year on year, according to new forecasts from Omdia, with artificial intelligence emerging as the main driver of investment across infrastructure, cloud and enterprise technology markets.
The forecast points to strong growth in infrastructure spending, which is expected to rise 31% to USD $154 billion. Server spending alone is projected to increase 53% as organisations expand data centre capacity to support AI workloads.
The figures suggest Europe is entering its fastest period of IT market growth since 2021. The expansion comes as businesses move beyond AI experimentation and begin deploying systems at scale.
Infrastructure growth
Demand for physical infrastructure is becoming a central feature of Europe's technology investment cycle.
Omdia expects organisations to increase spending on servers, cloud platforms and related services as they build the computing capacity required to train, deploy and operate AI models. The growth in server investment reflects the rising importance of data centres and high-performance computing environments in enterprise AI strategies.
Cloud providers and technology services firms are also expected to benefit from increased adoption as organisations integrate AI into business operations.
The spending trend indicates a shift from pilot programmes towards production environments, where companies require larger, more resilient infrastructure to support ongoing workloads.
Sovereignty focus
The forecast arrives as European policymakers prepare a new wave of technology initiatives through the European Union's planned Tech Sovereignty package.
The proposed measures are expected to address areas including artificial intelligence, cloud infrastructure, semiconductors and broader digital capabilities.
At the same time, Omdia's latest AI Maturity Survey found that 71% of organisations in Western Europe support national AI sovereignty. The findings highlight growing interest in how AI infrastructure, data governance, skills development and supply chains are managed.
Questions around sovereignty have become increasingly important as AI adoption expands. Organisations are paying closer attention to where data is stored, who controls critical infrastructure and whether domestic capabilities can support long-term deployment.
The survey suggests many European businesses view these issues as strategic considerations rather than purely technical concerns.
UK momentum
Within the broader European market, the UK continues to attract significant attention as a growing AI hub.
According to the forthcoming Tech Nation Report 2026: The Next Wave of UK AI, the UK technology sector is expanding three times faster than France and twice as fast as Germany.
The report attributes that growth to strong investment activity and an expanding AI workforce.
The UK's performance forms part of a wider regional effort to strengthen local technology ecosystems while competing with the United States and Asia for AI investment, talent and infrastructure development.
Ecosystem challenge
"Europe has no shortage of AI ambition. The question now is how quickly we can turn that ambition into action.
The next phase of AI growth will not be shaped by policy alone, or by any single company, sector or country. It will depend on the strength of the whole ecosystem: founders building new companies, investors backing them, corporates adopting new technologies, governments creating the right conditions, and infrastructure providers enabling AI to scale. London Tech Week is the convening point for that conversation, and more importantly, for the action that follows," said Carolyn Dawson, Chief Executive Officer, Founders Forum Group, and Lead for London Tech Week.
The latest forecasts indicate that AI is increasingly shaping technology spending decisions across Europe. Organisations are directing larger portions of their budgets towards infrastructure, cloud services and operational capabilities required to support long-term AI deployment.
For governments, the trend also carries implications for industrial policy, digital competitiveness and the development of local technology ecosystems. With European IT spending forecast to reach USD $1.3 trillion and infrastructure investment accelerating, decisions around AI deployment, sovereignty and capital allocation are becoming increasingly interconnected.