The European tech sector enters a new phase of intense investment. According to the latest Gartner forecasts, IT spending in Europe will reach $1.4 trillion in 2026, representing an 11.1% increase compared to 2025. For the same year, the consultancy estimates that total IT expenditure will already have reached $1.29 trillion.
The driving forces behind this growth are three clear initials: AI, cloud, and security. European CIOs, despite budget pressures and limited staffing growth, are reallocating resources toward software and services that enable them to incorporate generative artificial intelligence capabilities, strengthen critical infrastructure, and defend against an increasingly complex threat environment.
Software Leads Growth… and Also the Bill
Software spending will continue to be the main protagonist. Gartner predicts that software expenditure will go from $290.235 billion in 2025 to $335.409 billion in 2026, with a year-over-year growth of 15.6%.
The explanation lies in two factors:
- New AI features embedded in applications already used by companies (ERP, CRM, productivity, analytics, development tools, etc.), usually under more expensive subscription models or new paid modules.
- Widespread price hikes across nearly all software categories, pushing budgets upward even when license volumes remain stable.
For CIOs, this results in a complex equation: leverage AI capabilities to automate tasks, personalize experiences, and improve decision-making… without going over budget.
Devices Also Get More Expensive with the Arrival of AI
The device market (PCs, laptops, mobiles, tablets, and other endpoint equipment) will also experience an additional “boost.” Gartner estimates that spending will rise from $143.668 billion in 2025 to $158.193 billion in 2026, an increase of 10.1%.
The reason is less about a massive growth in units sold and more about the shift to devices with integrated AI capabilities (PCs with NPU, mobiles with dedicated AI engines, etc.) and the impact of higher hardware costs on the final prices.
Companies will upgrade part of their hardware fleet aiming to achieve:
- Better performance in local AI tasks (assistants, copilots, endpoint analytics).
- Less reliance on the cloud for sensitive workloads or in environments with limited connectivity.
Data Centers and AI Servers: Europe Accelerates but Still Trails
The building of AI infrastructure will remain a priority in 2026. Gartner forecasts robust growth in data center systems (from $83.632 billion in 2025 to $99.335 billion in 2026, +18.8%).
Specifically, the focus is on AI-optimized servers equipped with GPUs and specialized accelerators. In Europe, end-user spending on such servers is expected to reach $46.8 billion in 2026, up from $39.3 billion in 2025.
However, the continent will still lag behind other regions:
- North America: around $170 billion in 2026.
- China: approximately $67 billion.
In other words, Europe invests, but from a less dominant position in the race for AI infrastructure.
Digital Sovereignty and “Europe-Made AI Platforms”
Beyond the numbers, geopolitics and regulation are increasingly influential. Gartner emphasizes that Europe faces regulatory pressures, geopolitical tensions, and national security concerns that drive the development and management of local AI systems, reducing dependence on foreign platforms or providers.
This is fostering:
- European AI platforms, tailored to local regulatory requirements and data protection laws.
- Debates on digital sovereignty, affecting cloud provider selection and critical infrastructure design.
The consultancy projects that by 2027, up to 35% of countries will be “locked into” region-specific AI platforms, based on contextual data and heavily influenced by governments and major cloud providers. Today, that figure is only around 5%.
Public Cloud Expanding… but Facing Turbulence
Public cloud spending in Europe will continue its expansion. Gartner estimates that by 2026, end-user cloud spending will grow by approximately 24%.
However, growth will not be linear:
- IT leaders are reassessing their multi-cloud and data sovereignty strategies, seeking providers and regions that ensure regulatory compliance and control over data storage and processing locations.
- Some projects may relocate workloads from outside the EU to European data centers or clouds operated by local providers in partnership with hyperscalers.
Meanwhile, overall IT services (consulting, systems integration, outsourcing, managed support, etc.) will grow from $490.398 billion to $539.927 billion by 2026, a 10.1% increase. Much of this spending will be tied to modernization, cloud migration, AI deployment, and cybersecurity enhancements.
Communications as the “Glue” of Digital Transformation
Communication services (fixed networks, mobile, data traffic, etc.) will also increase—from $277.826 billion in 2025 to $294.988 billion in 2026, a 6.2% rise.
Though growth is more moderate than in other segments, it remains critical:
- 5G networks and future evolutions will support new edge AI applications (edge computing).
- The demand for robust, low-latency connectivity will grow as companies implement automation, digital twins, and real-time analytics.
An Investment Cycle Driven by the “Supercycle of Intelligence”
Gartner describes this phase as a “supercycle of intelligence”, where IT purchase decisions will be heavily influenced by:
- The integration of generative AI across nearly all layers of the tech stack.
- The need for infrastructures capable of supporting massive training and inference workloads.
- Regulatory and strategic control over data and platforms.
European IT leaders will navigate a delicate balance in 2026 and beyond—balancing innovation, cost management, and compliance.
Frequently Asked Questions About the Rise in IT Spending in Europe in 2026
1. Which IT areas are expected to grow most in Europe in 2026 according to Gartner?
The highest growth areas are software (+15.6%) and data center systems (+18.8%), driven by the adoption of AI capabilities, infrastructure modernization, and deployment of AI-optimized servers.
2. Why are software costs surging for European companies?
Because providers are adding generative AI features and advanced analytics to their products, usually under more expensive licenses or new modules, coupled with widespread price hikes across many categories. This causes software spending to grow even if the number of users or licenses remains unchanged proportionally.
3. How does digital sovereignty influence IT investment decisions?
Digital sovereignty is crucial: many European governments want sensitive data and AI platforms managed within the EU or under strict European regulations. This promotes the development of regional AI platforms and encourages big cloud providers to partner with local players to meet regulatory demands.
4. Is Europe competing on equal footing with the U.S. and China in AI infrastructure?
Not yet. While European spending on AI-optimized servers is rapidly increasing (up to about $46.8 billion in 2026), it remains well behind North America and China. Europe is accelerating, but from a smaller base and must reconcile this with a more demanding regulatory environment.
Sources: IT spending forecasts from Gartner for Europe (Q3 2025 update) and related public documentation—including the Gartner Market Databook and the webinar “IT Spending Forecast, 3Q25 Update: How The Intelligence Supercycle Will Transform IT Buying”.