US corporate investment in artificial intelligence is growing at nearly three times the pace of European firms' spending, a post-pandemic divergence that projections suggest will widen the transatlantic technology gap through 2027.

Oxford Economics, a global forecasting and analysis firm, projects that US corporate spending on new AI hardware and infrastructure will grow 40% between 2021 and the end of next year. A separate Stanford AI Index report, an annual assessment published by Stanford University's Human-Centered Artificial Intelligence institute, shows that US private AI investment currently stands at 23 times China's, with the United States easily outpacing both China and Europe in generative AI funding.

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The gap between the US and China may nonetheless be smaller than private funding figures suggest, as Chinese government support has contributed an estimated $184 billion to the country's AI sector over the past 23 years. Europe, by contrast, is expected to fall further behind: Oxford Economics predicts corporate AI spending there will rise by just 12%.

A decade-long spending spree

Globally, companies are pouring money into AI largely to defend their competitive positions. The build-up has been underway for a decade, with total AI funding — including private investment, mergers and acquisitions, public listings, and minority stakes — expanding roughly 40-fold since 2013.

Momentum peaked in 2025, when total global investment jumped 129.9% in a single year to $581.69 billion. Private investment accounted for the largest share of that total at $344.66 billion, up 127.5% from 2024.

Analysts expect spending to accelerate further, particularly in the US. Oxford Economics forecasts a 40% surge in real terms for US investment by the end of 2027, against just 12% growth for the euro area over the same period — a trajectory that underscores how America's post-pandemic spending boom is widening the gap with Europe.

Daniel Harenberg, an economist at the consultancy, flagged the divide as early as late 2024, noting that the US was more dynamic and entrepreneurial, and better positioned to move quickly in the AI race.

Warnings of an “investment bust”

Not everyone views the boom as sustainable. The Bank for International Settlements, the Basel-based institution often described as the central bank for central banks, and other major watchdogs have sounded the alarm over a potential “investment bust,” pointing out that America's boom is heavily tied to continued growth in AI spending — a vulnerability if the technology fails to deliver the returns investors expect.

Tech giants remain undeterred. Google, Meta, Microsoft, and Amazon are together poised to invest more than $725 billion in AI infrastructure in 2026 alone.

Karsten Junius, head economist at Bank J Safra Sarasin, a Swiss private bank, remains optimistic about the euro area, arguing that Europe's lagging figures will prove temporary. “AI investment in the US is not going to continue at this scale indefinitely,” he said.

Still, Junius acknowledged the harsh reality: if Europe does not catch up in advanced technology, the average European's quality of life will keep declining relative to that of Americans.

Why the US is pulling ahead

The investment gap reflects more than the money being spent. The US has a larger pool of technology companies, venture capital, and private investors available to back large-scale AI projects. Its biggest technology companies also generate enormous cash flows that can be redirected into data centers, advanced chips, and AI infrastructure.

Europe, in contrast, has a more fragmented technology market and generally fewer companies operating at the scale of America's largest AI players. That could make it harder for European businesses to keep pace with US investment, especially as the cost of building and deploying increasingly powerful AI systems continues to rise.

The divide may grow more consequential as AI moves from experimentation into core business operations. Companies that invest early could gain advantages in productivity, automation, and access to advanced AI tools, potentially widening the economic gap between the two regions.

Europe has also moved early on regulation. In 2024, the European Union adopted its AI Act to address AI-related threats such as the proliferation of AI-generated misinformation, with the bulk of its obligations phasing in from August 2026. The legislation has since drawn considerable criticism and opposition, with some arguing that the strict rules will hinder innovation.

Consumer value and adoption surge

Beyond the corporate cash race, AI is delivering substantial low-cost benefits directly to everyday consumers. Generative AI saw a 54% annual increase in the actual value it delivers to ordinary people.

By early 2026, the estimated annual benefit to US consumers had climbed to $172 billion, from $112 billion a year earlier, with median user value tripling even as the software remains free or nearly free.

Corporate adoption has surged as well. AI adoption reached 88% among surveyed companies in 2025, though AI agents remain an early-stage trend. Currently, 70% of organizations use generative AI in at least one business area, led by significant year-over-year gains in China and Europe.