As per MRFR analysis, the Europe AI in IoT Market Size was estimated at 1.66 (USD Billion) in 2023.The Europe AI in IoT Market is expected to grow from 2.13(USD Billion) in 2024 to 32.72 (USD Billion) by 2035. The Europe AI in IoT Market CAGR (growth rate) is expected to be around 28.203% during the forecast period (2025 - 2035)
Key Europe AI in IoT Market Trends Highlighted
A number of important market factors, including rising investments in smart city projects, efforts at digital transformation, and government programs to boost productivity through cutting-edge technologies, are propelling the AI in IoT market in Europe.European nations are concentrating more on using AI and IoT to optimize energy use, boost public safety protocols, and improve transportation. As part of its efforts to become a leader in digital innovation, the European Union supports frameworks and policies that stimulate the use of AI in a variety of industries, such as manufacturing, healthcare, and agriculture.
According to recent trends, European businesses are using AI in IoT more and more for operational efficiency and predictive maintenance. This is especially noticeable in sectors like manufacturing, where businesses are using analytics powered by AI to increase the dependability of their equipment.By facilitating real-time monitoring and decision-making, the integration of AI with IoT also improves supply chain management, lowering costs and enhancing regional service delivery. Furthermore, there are a lot of chances for companies to investigate the advantages of AI in IoT due to the continuous push for sustainable practices.
To cut waste and pollution, for instance, governments are rewarding green projects that use smart technologies. Another area of opportunity for European market participants is the growing demand for smart home appliances, which is being driven by consumer interest in automation and energy efficiency.In conclusion, Europe will play a crucial role in determining the direction of smart technologies in the future as a result of the convergence of AI and IoT, which is expected to promote innovation across a range of industries, enhance operational efficiencies, and enable technological improvements.
Source: Primary Research, Secondary Research, MRFR Database and Analyst Review
Europe AI in IoT Market Drivers
Increased Adoption of Artificial Intelligence and IoT in Smart Cities
The growing trend of developing smart cities across Europe is significantly driving the Europe Artificial Intelligence in Internet of Things Market. According to the European Commission, over 200 municipalities in Europe are actively implementing smart city initiatives aimed at improving urban living conditions through the integration of technology.
This shift is expected to fuel a 15% increase in the adoption of IoT devices within these urban areas over the next five years. Major companies like Siemens and IBM are leading the charge by providing AI-driven solutions to enhance urban infrastructure, traffic management, and resource allocation.
The European Smart Cities Marketplace is also pushing for collaboration among stakeholders to foster innovation and AI implementation in IoT systems. This commitment to smart city development underscores the potential for robust growth in the Europe AI in IoT Market as cities invest in technology to enhance sustainability, efficiency, and quality of life.
Regulatory Support for AI and IoT Integration
The regulatory landscape in Europe is increasingly favorable for the integration of Artificial Intelligence technologies with IoT solutions, bolstering the growth of the Europe Artificial Intelligence in Internet of Things Market.The European Union's Digital Single Market strategy aims to create a seamless online environment that fosters innovation and technological advancements. The proposal for the AI Act, which is set to establish guidelines for the ethical deployment of AI, further supports this integration.
This regulatory clarity is motivating companies to invest in AI-equipped IoT systems. For instance, the European Telecommunications Standards Institute (ETSI) is actively working on ensuring interoperability standards for IoT devices, which is projected to lead to an increase in the adoption of AI technologies in IoT applications by 20% by 2025.
Growing Demand for Automation and Efficiency in Industries
The surge in demand for automation solutions across various industries in Europe is a major driver for the Europe Artificial Intelligence in Internet of Things Market. With industries such as manufacturing and logistics seeking to improve operational efficiencies, AI-enabled IoT devices are becoming increasingly essential.The European Robotics Association reports that industrial automation, particularly in manufacturing, is expected to grow by 35% over the next decade, driving significant investment in AI and IoT technologies.
Companies like Bosch and Schneider Electric are actively developing innovative AI solutions that harness IoT capabilities to optimize production processes, reduce downtime, and improve overall productivity. This collective push toward automation exemplifies how critical AI in IoT technologies has become in supporting Europe’s industrial advancement.
AI in IoT Market Component Insights
The Component segment of the Europe AI in IoT Market demonstrates a dynamic and evolving landscape driven by rapid technological advancements and the increasing adoption of interconnected devices across various industries.In this segment, Platforms play a critical role as they provide the foundational infrastructure required for the seamless integration of artificial intelligence and Internet of Things technologies. These platforms enable organizations to harness data effectively, fostering innovations that enhance operational efficiency and facilitate better decision-making processes.
Similarly, Software Solutions are essential, as they offer specialized applications and tools designed to analyze data collected from IoT devices. This functionality is significant in translating raw data into actionable insights, contributing to improved performance across various sectors.Moreover, Services form an integral aspect of this component segment, encompassing a wide range of professional offerings, including consulting, training, and maintenance, which are vital for ensuring the successful implementation and management of AI in IoT systems.
Together, these elements highlight the importance of the Component segment in driving the Europe AI in IoT Market, fostering a comprehensive ecosystem where advanced technologies can thrive, ultimately leading to enhanced productivity and innovation in numerous applications throughout the region.
Source: Primary Research, Secondary Research, MRFR Database and Analyst Review
AI in IoT Market Technologies Insights
The Technologies segment of the Europe AI in IoT Market is poised for substantial growth, driven by the increasing adoption of advanced technologies across diverse sectors. Machine Learning (ML) and Deep Learning are instrumental in processing large volumes of data generated by IoT devices, enabling insights that enhance operational efficiency and decision-making.
Natural Language Processing (NLP) plays a crucial role in bridging communication gaps between users and machines, facilitating seamless interaction in smart environments. The significance of these technologies is underscored by their ability to enable predictive analytics, enhance customer engagement, and automate processes.
As industries across Europe increasingly recognize the value of integrating AI with IoT, there is a growing demand for solutions that leverage these technologies. Key trends include the rise of smart cities and advancements in predictive maintenance, with emphasis on tangible applications such as autonomous vehicles and real-time monitoring systems.
Challenges such as data privacy and the need for robust infrastructure remain, but the opportunities for innovation in these areas present a promising landscape for the Europe AI in IoT Market, as organizations strive to harness the full potential of data-driven strategies.
AI in IoT Market Vertical Insights
The Vertical segment of the Europe AI in IoT Market showcases diverse applications across various industries, reflecting the growing integration of artificial intelligence with Internet of Things technologies. Manufacturing has surfaced as a significant domain, leveraging AI for predictive maintenance and enhanced operational efficiencies.
The Energy and Utilities sector is also gaining traction, adopting intelligent analytics to optimize energy distribution and consumption patterns. Transportation and Mobility are essential in improving logistics and enabling smart traffic management systems, which align with the European push towards sustainability.
In the BFSI sector, AI assists in risk assessment and enhances customer service, fundamentally transforming traditional banking practices. Government and Defense utilize AI in IoT for security enhancements and infrastructure management, driven by the region's focus on advanced security solutions.
The Retail industry employs AI-driven insights for personalized customer experiences and inventory management, thus attracting tech-savvy consumers. Healthcare and Life Sciences benefit from AI in IoT through improved patient monitoring and predictive health management.
Lastly, the Telecom sector supports the infrastructure for AI implementations, contributing to a more connected Europe. Overall, this market is driven by the increasing demand for efficiency, personalization, and enhanced security across these verticals, presenting vast opportunities for advancements and innovations in the Europe AI in IoT Market.
AI in IoT Market Regional Insights
The Europe AI in IoT Market is experiencing significant growth, driven by increasing automation and connectivity across various industries. Germany is at the forefront, showcasing strength in manufacturing and automotive sectors, where AI enhances operational efficiency and predictive maintenance.
The UK, with its strong technology base and innovation culture, plays a crucial role in developing AI solutions that integrate seamlessly with IoT devices, fostering smart cities and infrastructure. France is emerging as a significant player, focusing on smart healthcare applications that utilize AI for better patient outcomes and resource management.
Russia is enhancing its AI and IoT capabilities to improve industrial processes, while Italy is focusing on smart manufacturing and energy efficiency, highlighting the importance of AI in IoT for sustainability. Spain is catching up, promoting smart agriculture and logistics solutions.
The Rest of Europe contributes to the market through diverse applications across sectors such as logistics, energy, and retail, emphasizing the value of AI-powered IoT devices. Overall, the regional segmentation highlights the unique strengths of each country, showcasing their vital roles in advancing the Europe AI in IoT Market.
Source: Primary Research, Secondary Research, MRFR Database and Analyst Review
Europe AI in IoT Market Key Players and Competitive Insights:
The Europe AI in IoT Market is rapidly evolving as various industries increasingly adopt smart technologies to streamline operations and enhance productivity. The market is distinguished by strong competition among key players, each bringing unique innovations and strategic approaches to harness the power of artificial intelligence in Internet of Things applications.The competitive landscape features companies vying for leadership by focusing on technological advancements, collaboration with local enterprises, and investment in research and development to create more sophisticated and efficient IoT solutions.
As demand for intelligent systems surges across sectors such as manufacturing, automotive, healthcare, and smart cities, understanding the competitive insights of major players in this market is crucial for stakeholders aiming to make informed decisions and capitalize on growth opportunities.Siemens is a formidable competitor within the Europe AI in IoT Market, leveraging its extensive expertise in automation and digitalization to develop cutting-edge IoT solutions. Renowned for its strong presence in smart manufacturing, Siemens integrates AI capabilities into its IoT platforms, enabling clients to optimize operations and achieve greater efficiency.
The company’s strengths lie in its robust industrial automation portfolio, its ability to provide customized solutions tailored to varying industrial needs, and a history of strategic collaborations with local businesses and research institutions.Siemens effectively combines hardware and software solutions, which enhances its positioning in the rapidly growing AI-driven IoT segment. As industries in Europe adopt digital transformation initiatives, Siemens remains at the forefront, addressing the diverse needs of clients while pushing the boundaries of what is possible with AI and IoT technology.
Google stands out as a significant player in the Europe AI in IoT Market, focusing on providing cloud-based solutions and advanced AI analytics. Google offers a suite of products and services that leverage artificial intelligence to enhance IoT applications, particularly in smart home products, industrial automation, and data analytics.The company’s strengths include its powerful cloud infrastructure, machine learning capabilities, and vast expertise in data processing, making it a preferred choice for businesses seeking scalable IoT solutions. Google’s strategic investments include partnerships and acquisitions that bolster its presence in Europe, allowing it to tap into local markets and accelerate innovation.The company continuously strives to enhance its offerings in AI and IoT, supported by a strong commitment to research and development, ultimately turning challenges into opportunities for growth within the region.
Key Companies in the Europe AI in IoT Market Include
Europe AI in IoTMarket Developments
Siemens debuted AI agents for industrial automation at Hannover Messe in August 2025. Bosch declared in July 2025 that it would improve industrial and transportation solutions by investing more than €2.5 billion in AI by the end of 2027.In order to strengthen digital sovereignty and foster AI innovation, SAP extended its Sovereign Cloud solutions in September 2025 to offer European clients a full technology stack. The UK is leading Europe in the adoption of AI, workforce upskilling, and cybersecurity, according to Rockwell Automation's 10th annual State of Smart Manufacturing Report, released in June 2025.
With plans to train 230,000 people over the next three years, Cisco unveiled projects in France in May 2025 that center on energy-efficient AI-ready infrastructure, digital upskilling, and the AI startup ecosystem.Despite worries about possible obstacles to Europe's AI research, Google announced plans in August 2025 to sign the EU's AI code of practice, which is intended to assist businesses in adhering to the impending AI Act.IBM and BMW joined together in March 2025 to manage and integrate finance and procurement operations, utilizing AI to improve productivity and decision-making.
At Embedded World 2025 in March 2025, Intel demonstrated advancements in edge and 5G technology, emphasizing the use of AI solutions in industrial settings. In order to overcome the underrepresentation of Europe's 24 official and 250 indigenous languages in AI training data, Microsoft launched a major program in August 2025 to enhance multilingual large language models.
Europe AI in IoT Market Segmentation Insights
AI in IoT Market Component Outlook
AI in IoT Market Technologies Outlook
AI in IoT Market Vertical Outlook
AI in IoT Market Regional Outlook
| Report Attribute/Metric Source: | Details |
| MARKET SIZE 2023 | 1.66(USD Billion) |
| MARKET SIZE 2024 | 2.13(USD Billion) |
| MARKET SIZE 2035 | 32.72(USD Billion) |
| COMPOUND ANNUAL GROWTH RATE (CAGR) | 28.203% (2025 - 2035) |
| REPORT COVERAGE | Revenue Forecast, Competitive Landscape, Growth Factors, and Trends |
| BASE YEAR | 2024 |
| MARKET FORECAST PERIOD | 2025 - 2035 |
| HISTORICAL DATA | 2019 - 2024 |
| MARKET FORECAST UNITS | USD Billion |
| KEY COMPANIES PROFILED | Siemens, Google, Accenture, Bosch, SAP, Rockwell Automation, Cisco Systems, Alphabet, IBM, Intel, Nokia, Arm, Microsoft, Amazon Web Services |
| SEGMENTS COVERED | Component, Technologies, Vertical, Regional |
| KEY MARKET OPPORTUNITIES | Smart home automation solutions, Predictive maintenance applications, Industrial IoT optimization, Enhanced healthcare monitoring systems, AI-driven supply chain management |
| KEY MARKET DYNAMICS | Data privacy regulations, Rise of smart devices, Increasing cloud adoption, Enhanced connectivity solutions, Growing demand for automation |
| COUNTRIES COVERED | Germany, UK, France, Russia, Italy, Spain, Rest of Europe |
Frequently Asked Questions (FAQ):
The estimated market size of the Europe AI in IoT Market in 2024 is valued at 2.13 USD Billion.
By 2035, the projected market size of the Europe AI in IoT Market is expected to reach 32.72 USD Billion.
The expected CAGR for the Europe AI in IoT Market from 2025 to 2035 is 28.203%.
In 2035, the UK is anticipated to have the largest market size in Europe with an estimated value of 7.21 USD Billion.
In 2024, the market size for platforms in the Europe AI in IoT Market is valued at 0.85 USD Billion.
Major players dominating the Europe AI in IoT Market include Siemens, Google, Accenture, and IBM among others.
The expected market size for services in the Europe AI in IoT Market in 2035 is projected to be 8.1 USD Billion.
By 2035, the Germany segment of the Europe AI in IoT Market is anticipated to grow to 6.82 USD Billion.
In 2024, the market size for software solutions in the Europe AI in IoT Market is valued at 0.75 USD Billion.
The growth of the Europe AI in IoT Market is driven by increasing demand for automation, improved analytics, and enhanced connectivity.
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Team Lead - Research she holds an experience of about 6+ years in market research and business consulting, working under the spectrum of information communication technology, telecommunications and semiconductor domains. aarti conceptualizes and implements a scalable business strategy and provides strategic leadership to the clients. her expertise lies in market estimation, competitive intelligence, pipeline analysis, customer assessment, etc.
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