Europe’s IT Spending to be $1.28 Trillion in 2025

Information Technology (IT) spending in Europe is set to reach $1.18 trillion by end of this year and projected to a total $1.28 trillion in 2025, an increase of 8.7% from 2024, according to the latest forecast by global management company Gartner.

John-David Lovelock, Distinguished VP Analyst at Gartner, said that 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.

“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,” he said.

European businesses, that have recognised the value of IT during the pandemic, are expected to significantly boost IT spending in 2025 to stay competitive and grow revenue, Gartner said.

Aided by a surging interest for generative AI (GenAI) solutions, CIOs in Europe will drive their IT budgets into an era of high growth and innovation. 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 limited success of many pilots and proofs of concept (POCs) in 2024, will push European organisations to shift from building their own GenAI solutions to buying and implementing partner solutions in 2025,” Lovelock explained.

Gartner estimates spending on IT services related to AI in Europe will grow from $78 billion in 2024 to $94 billion in 2025.

Data Centre Trends in Europe

End-user spending on servers in Europe is estimated to grow 25% in 2024 due to increased demand for AI-optimised servers. Spending on servers will continue to grow in 2025 but at a slower pace (11%).

“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.

Gartner’s IT spending forecast methodology relies heavily on rigorous analysis of the sales by over a thousand vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.

The Gartner quarterly IT spending forecast delivers a unique perspective on IT spending across the hardware, software, IT services and telecommunications segments.

These reports help Gartner clients understand market opportunities and challenges. The most recent IT spending forecast research is available to Gartner clients in “Gartner Market Databook, 3Q24 Update.” 

Spending on data centre systems is set to grow from $50 billion in 2024 to $54.4 billion in 2025, representing growth rates of 11.1% in 2024 and 8.7% in 2025. Likewise, the expenditure on devices, which includes hardware like computers and smartphones, will grow from $134.2 billion in 2024 to $146.7 billion in 2025.

Even software spending is projected to see the highest increase, growing by 11.4% in 2024 and accelerating further to 13.2% in 2025, reaching $288.2 billion, Gartner said.