Europe’s IT spending to surpass $1.4 trillion by 2026

Article by Gadjo Sevilla | Mar 1, 2023

The news: Information and communications technology (ICT) in Europe is expected to reach $1.2 trillion this year, reflecting a 4.2% YoY growth despite fears of a recession, per IDC.

Europe’s positive outlook: Europe’s businesses will continue to spend on technology in the next four years to gain a competitive edge and solve existing problems in an increasingly uncertain market.

ICT spending in Europe is expected to surpass $1.4 trillion by 2026, a 5.4% compound annual growth rate (CAGR) between 2021 and 2026.
In Russia, however, sanctions and the number of companies leaving the country resulted in the ICT market shrinking 9.4% YoY.

Areas for growth in technology: Software is the fastest-growing technology group YoY, with investments in cloud-first solutions driving the market.

Artificial intelligence (AI), software quality and lifecycle tools, and collaborative software will continue to receive investments.
Device sales, including PCs and smartphones, have suffered from declining demand, supply chain shortages, and enterprise cutbacks, resulting in a 2.2% YoY decline in 2023.

The opportunity: Europe’s consumer sector will continue to be the largest IT spenders in 2025 and represent 28% of total European revenue, even as YoY growth is below 1% due to cost of living increases, per IDC.

Banking will continue to be the largest spending industry with a 13.5% share in 2023, while professional services will be the fastest growing between 2021 and 2026.
Despite increasing inflationary pressures in several European countries, business investments in IT and business services, telecom services, and hardware are expected to increase.

Our take: Buoyed by the surging interest in AI and growing reliance on cloud-computing services and solutions, IT spending in the US this year could echo Europe’s investment in being competitive, especially in segments where it has fallen behind.

This could mean companies like Intel doubling down on AI-focused chip development despite the economic downturn.
Investments in cloud and quantum computing might take a few years to yield results, but could gain market share.