AI drives European IT spending

That piece of information will come as no surprise to anyone involved in this industry, but the analyst firm's latest forecast on IT spending in Europe contains some interesting snippets that make it worth a look.

Overall, IT spending across the continent will come in at US$1.28 trillion in 2025, an increase of 8.7% on an expected spend of $1.18 trillion this year, Gartner predicts. "2025 is poised to set a record as the highest growth rate in IT spending in a single year in Europe since the post-pandemic surge in 2021," the analyst firm declared.

Industry watchers with long memories may recall that this time last year we reported on Gartner's previous IT spending forecast for Europe in which it predicted that growth in 2024 would come in at 9.3% on the back of a $1.1 trillion outlay. Growth last year was actually just 6.5% though, which we presume means spending in 2023 exceeded expectations.

Whatever the reason, growth is set to rise and while there are a number of drivers in play, the one garnering the most attention at present is, of course, AI.

"In 2024, the surge of building out AI-related infrastructure by technology providers is driving high levels of spending on data centre systems in Europe,” said John-David Lovelock, Distinguished VP Analyst at Gartner.

The firm estimates that end-user spending on servers will grow by 25% this year on the back of increased demand for AI-optimised servers, but will drop back to 11% in 2025.

"Europe has seen a remarkable 46% increase in server spending by technology providers in 2024. In 2025, technology companies will continue building out the infrastructure needed for training GenAI models today and inferencing them in the future," Lovelock said.

Essentially, the growing interest in GenAI will see European businesses hike IT spending to stay competitive and increase revenue.

However, next year there will be a shift away from organisations building their own GenAI solutions as a result of the limited success of pilots and proofs of concept to date, towards buying and implementing partner solutions, the analyst firm notes.

The biggest market segment by some margin is IT services, accounting for 38% of spending this year, or $448.6 million. A huge – and growing – chunk of that market is services related to AI. Gartner forecasts that in 2025 spending on AI-related IT services in Europe will increase to $94 billion, up from $78 billion in 2024.

It's not all about AI though, although you could be forgiven for thinking otherwise at present.

"CIOs in Europe will continue investing in public cloud end-user spending, which is estimated to reach $123 billion in 2024, and grow their security spending, projected to reach $47 billion in 2024," Lovelock said, highlighting another couple of key growth areas.

The overall IT spending growth forecast is, of course, great news for those on the supply side. But it could be some time before those investing heavily in AI and related infrastructure and services see any real return.