Europe’s AI investment boom shows up in infrastructure, trade and software use

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Europe’s AI investment boom

Highlights

Dutch machinery output surged 43% year-on-year in September, driven by AI-related demand and the strong performance of ASML.
Goldman Sachs projects the EU will represent about 10% of new global data-centre capacity in 2024, while digital services investment is accelerating in the euro area.
The AI infrastructure boom has lifted European growth by just 0.1 percentage points, with most productivity benefits concentrated in ICT services and software imports from the U.S. impacting the current account surplus.

Infrastructure spending and trade signals emerge

As reported by Financial Times, Europe is not closing the gap with the world’s top AI producers, but the regional data increasingly reflects activity linked to the global AI buildout. The bloc still has only a small share of global chip production, and just one of the world’s 64 leading large language models is European.

Even so, AI-related demand is feeding through to parts of Europe’s industrial base. In September, machinery output in the Netherlands is 43 per cent higher than a year earlier, supported by the performance of chip-equipment maker ASML. EU exports of products used to power, cool and operate data centres are also rising দ্রুত, helped by several of the region’s large industrial groups.

Some of that investment is taking place inside the EU as well. Goldman Sachs says the region will account for about 10 per cent of new global data-centre capacity this year. More broadly, digital services investment, including software and intellectual property, has accelerated in the euro area over the past couple of years, while corporate executives say AI has lifted their capital spending by 10 per cent on average.

Adoption gains matter more for growth outlook

The macroeconomic effect remains modest so far. Goldman Sachs estimates the AI infrastructure boom has added about 0.1 percentage points to European growth, while European Central Bank chief economist Philip Lane says computers, electronics and ICT services account for a high share of recent growth in market production, amounting to 0.6 per cent since the start of 2025.

Europe is also importing large amounts of AI-related software from the U.S., particularly through software licensing, a shift that appears to have reduced the euro area’s current account surplus. That raises questions over who ultimately captures the gains from AI, especially if a meaningful share of the income generated by adoption flows to foreign exporters rather than domestic labour or capital.

Productivity benefits remain difficult to identify outside some signs of unusually strong growth in ICT services, according to Capital Economics. Still, survey evidence from the European Investment Bank suggests European companies are using AI at rates broadly similar to U.S. peers, even if American businesses tend to deploy it more widely across operations and expect stronger gains in sales and revenue, while European firms more often target efficiency and cost reductions.

Research cited in the analysis also suggests sentiment may be holding back investment. European executives tend to underestimate how much peers are spending on AI, but become more willing to raise their own plans when shown evidence of stronger investment by rivals in the same country.

We have previously detailed how AI data-center financing risks are rising amid delays, higher costs and power constraints in the U.S.

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