By Samira Farzad, Head of Business Development at HF Quarters
The European artificial intelligence sector has become a primary target for global capital in 2025, with private equity (PE) and hedge funds deploying increasing capital in the industry. This influx is fueled by technological breakthroughs and supportive government policies like the “AI Continent Action Plan,” creating a vibrant ecosystem of AI companies ripe for investment. This focus is reflected in deal flow, with the Information and Communication Technology (ICT) sector emerging as a top destination for European growth capital.
From a public markets perspective, hedge funds and other asset managers are channeling capital into the sector primarily through thematic funds. Europe has become the world’s largest market for AI-focused funds, with assets under management reaching USD 22.7 billion by May 2025.
However, while the investment vehicles are European, their portfolios are overwhelmingly concentrated in US-listed technology giants. Nvidia is a top holding in nearly 90% of these funds, followed by Microsoft and Alphabet, underscoring Europe’s current role as a significant capital provider for established American AI leaders. Meanwhile, venture capital continues to seed the next wave of innovation, with European agentic AI startups raising EUR 1.6 billion in 2024 and attracting significant early-stage funding in 2025, building the pipeline for future PE and public market investment on the continent.