Europe trails the United States in artificial intelligence investment, but could still reap sizeable productivity gains if adoption accelerates, according to a new report from UBS.
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UBS analysts estimate that total AI investment in the European Union reached €337 billion in 2024, equivalent to 1.9% of GDP, with the euro area accounting for €278 billion, or 1.8% of GDP. The bank said EU spending amounts to just over half, about 56%, of U.S. AI investment in level terms.
UBS constructed an EU-wide dataset that includes core AI technologies and complementary assets such as skills and data. Skills represent the largest share of European AI investment at 55%, followed by data and equipment (29%), research and development (9%), and other intellectual property (7%) .
Germany, France and Italy are the largest investors in absolute terms, though smaller economies such as Lithuania, Estonia and Greece lead when measured as a share of GDP .
Despite the investment gap, UBS said Europe could see productivity gains of 0.8% to 1.1% over five years if AI adoption is effective, citing IMF estimates based on work by economist Daron Acemoglu. That would compare with a 0.7% productivity boost estimated for the U.S. over a decade.
However, UBS cautioned that Europe’s comprehensive AI regulatory framework, including the EU AI Act, could dampen adoption and reduce potential gains. In an illustrative scenario, stricter regulation could lower AI-related productivity gains by more than 30%, the note said.
In equity markets, UBS said investors have so far favored AI “enablers” such as chip equipment and power infrastructure suppliers, while penalizing companies seen at risk of disruption. The bank argued that the next phase may focus more on “adopters”, firms in banking, retail, logistics and healthcare that can leverage AI to expand margins and improve operational efficiency .
