Why are Germany's Mittelstand companies reducing AI investment?

Mittelstand companies are cutting AI investment due to geopolitical tensions, a focus on cost optimization, and implementation challenges like bureaucracy and digitalization delays.

What is the current AI spending trend for German SMEs?

In 2025, German SMEs spent 0.35% of their revenue on AI, a decrease from 0.41% in 2024, while overall corporate AI spending increased.

What are the risks for German Mittelstand if AI transformation is not accelerated?

If AI transformation isn't accelerated, the technology gap could develop into an existential strategic risk for the Mittelstand.

Home / Business and Economy / German SMEs Sidelining AI Investment

German SMEs Sidelining AI Investment

8 Jan

•

Summary

Mittelstand AI investment fell to 0.35% of revenue in 2025.
Corporate AI spending increased to 0.5% of revenue in 2024.
Geopolitical tensions and digitalization hurdles impact AI adoption.

German small and medium-sized companies, known as the Mittelstand, are significantly reducing their investment in artificial intelligence technologies. A recent study revealed that these firms allocated 0.35% of their revenues to AI in 2025, a decrease from 0.41% in the previous year. This cautious approach sharply contrasts with the broader corporate landscape, where overall AI spending climbed to 0.5% of revenues in 2025.

This decline in investment is attributed to several factors impacting the Mittelstand. Geopolitical tensions have prompted a shift towards cost optimization, while early AI implementations may not have met initial efficiency expectations. Furthermore, bureaucratic obstacles and sluggish digitalization progress are impeding AI deployment, alongside concerns regarding data protection and digital sovereignty.

Experts caution that if these mid-sized companies do not accelerate their AI transformation efforts, the widening technology gap could pose an existential strategic risk. The study highlights the urgent need for these firms to overcome current challenges and embrace AI to remain competitive.