European businesses are rapidly increasing their cloud investments, with public cloud spending projected to surge from $221 billion in 2025 to $373 billion by 2028, according to IDC’s latest Worldwide Software and Public Cloud Services Spending Guide. This significant rise represents a 20% compound annual growth rate (CAGR) over the next five years, highlighting how cloud computing has become a crucial element of industry modernization.
A growing demand for Platform-as-a-Service (PaaS) solutions is fueling this expansion. Companies are actively integrating AI-powered solutions, enhancing automation, and leveraging cloud ecosystems to boost productivity.
However, economic and geopolitical factors may influence the speed of adoption. Trade tensions between the U.S. and the European Union, Germany’s economic slowdown, and rising competition from China could lead businesses to adjust their cloud investment strategies.
Certain industries are embracing cloud adoption more aggressively than others. Banking, insurance, and software services are at the forefront, with financial institutions deploying AI-driven cybersecurity tools to analyze vast datasets and strengthen fraud detection. Meanwhile, insurers are modernizing their core systems, and life sciences companies are investing in AI-powered drug discovery and supply chain enhancements.
The software and information services sector is set to experience the fastest cloud investment growth, with a projected CAGR of 24%. Businesses are pouring resources into Software-as-a-Service (SaaS) solutions, AI-driven business applications, and cybersecurity advancements. In contrast, chemical and automotive industries are adopting cloud technologies at a slower pace, as they continue to navigate supply chain disruptions and labor shortages.
Despite current challenges, IDC’s analysis underscores that cloud adoption remains a key driver of enterprise success. Companies increasingly recognize that automation, AI integration, and long-term digital resilience depend on cloud technologies. As organizations across Europe evolve, cloud investments will shape the future of both the economy and technological innovation.
