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.

This article originally appeared in Insider Intelligence's Connectivity & Tech Briefing—a daily recap of top stories reshaping the technology industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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