The advent of generative artificial intelligence (AI) is reshaping the technological landscape, prompting a significant surge in infrastructure spending. Investors and companies alike are eagerly navigating this new terrain, debating whether the burgeoning reality of AI can keep up with the lofty expectations set by its proponents.
Across Europe, substantial investments are being channeled into digital enablers—those crucial technology firms whose innovations underpin the creation of chips necessary for AI data centres. According to Goldman Sachs Research, these investments could yield double-digit growth in long-term earnings for key players in Germany, France, and especially the Netherlands.
Goldman Sachs Research analyst Alexander Duval sheds light on how the AI buildout is influencing the European tech ecosystem. The scale of global hardware investment is extraordinary, with the largest U.S. tech companies already spending around $200 billion this year. This figure is staggering, amounting to roughly a quarter of the total capital expenditure across all sectors in Europe. The bulk of this spending is aimed at enhancing AI data centres to enable the necessary parallel processing capabilities.
Despite the dominance of U.S. firms and the location of semiconductor foundries in Taiwan and Korea, European companies hold a critical position in this global supply chain. The pivotal role of Europe is twofold. Firstly, in the domain of semiconductor equipment, Europe stands out due to its unique expertise and technology. Specifically, ASML, based in the Netherlands, is the sole provider of extreme ultraviolet (EUV) lithography machines essential for printing intricate circuitry on chips. This monopoly underscores the indispensable nature of European technology in global AI development.
Additionally, other specialised technologies such as atomic layer deposition, which is crucial for building transistors on wafers, further cement Europe’s role in AI infrastructure. A notable company in the Netherlands excels in this precise material application process. Moreover, the region boasts leaders in hybrid bonding, a technology critical for enhancing the power efficiency and thermal management of AI chips.
The financial and technological contributions of these European companies are already manifesting. The infrastructure necessary for AI advancements is rapidly being established, highlighting the immediate and significant impact of these investments.
In summary, as the AI revolution accelerates, Europe’s technology sector is poised for substantial growth. The continent’s digital enablers are not only integral to the global AI supply chain but are also set to benefit immensely from the ongoing capital expenditure. The strategic investments being made today will likely secure Europe’s prominent position in the evolving AI landscape, fostering innovation and driving economic growth in the years to come.