European savings are increasingly helping to advance artificial intelligence in the United States. Christine Lagarde, President of the European Central Bank, announced that households in the Eurozone have invested around 440 billion euros in American technology companies, including Nvidia and Alphabet. She stated in Vienna that these savings may assist in the development of technology in the United States without Europe receiving a corresponding share of the economic benefits.
Investment Challenges in Europe
Lagarde explained that while the United States produced 59 prominent AI models last year, France and the UK produced only one model each. According to her, Europe is not lacking in financial resources, but the problem lies in directing these resources towards growing companies. By 2026, households in the Eurozone will hold nearly 10 trillion euros in bank deposits, while about 80 percent of these households have no stocks, bonds, or investment funds.
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Capital Market and AI in the United States
Many European investors are investing in American technology companies to access the AI market. Jeremy Plousso, a senior strategist in Europe, stated that investing in U.S. technology is not necessarily problematic and can help diversify risks. However, he warned that the U.S. technology sector is highly concentrated and investors may face risks arising from market volatility.
Lagarde also noted that major U.S. technology companies issued over 100 billion dollars in bonds last year and now account for nearly one-tenth of new euro-denominated bond issuance. This could have broader implications for borrowing costs in Europe.
Investment Gap in AI in Europe
The rapid deployment of AI could increase the productivity of the Eurozone by 4 percent over a decade. However, Europe lags behind the United States in terms of the infrastructure necessary for the development and implementation of AI. The European Commission estimates that the gap between demand and supply of data center capacity in the EU could reach 19 gigawatts by 2036. To fill this gap, around 600 billion euros may be needed.
Lagarde emphasized that Europe must seriously focus on developing technology infrastructure and attracting investment capital to benefit from the advancements in artificial intelligence.
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