As we begin 2026, Europe’s AI landscape is changing. While the pursuit of frontier innovation continues to be challenging, the moment has arrived for bold large-scale adoption initiatives. By prioritizing the real-world adoption of AI into public services, businesses and everyday life, Europe can establish itself as a global reference point for responsible and impactful AI deployment.
This focus on adoption is a noble and strategic ambition. Placing citizens and customers at the center enables Europe to harness AI’s transformative potential while reinforcing digital sovereignty and competitiveness. Estonia’s success in pioneering e-government offers a powerful example of how leadership in practical implementation can deliver lasting benefits for society and the economy.
The AI conundrum
Some of us are already experiencing AI’s convenience through consumer applications, yet we are not yet seeing its deeper, systemic benefits in daily life and core services. This is not because those benefits are unreachable, but because they have yet to be meaningfully pursued. The logical next frontier is scaling AI adoption across all sectors of Europe’s economy.
Europe possesses immense strengths: world-class talent, robust industries and a commitment to ethical, human-centered technology. This is the moral compass that only Europe can put forward to rapidly institutionalize the deployment of AI. It is a clear opportunity for Europe to lead.
Our European reality
Europe has fallen decisively behind in the global race for foundational AI. The frontier is now firmly established abroad—in the United States, with companies like OpenAI, Google, and Anthropic, and increasingly in China, where open-source models are simply awesome. Europe’s protégé, France-based Mistral AI, remains invisible on the global stage, despite being the best-funded AI lab in Europe. It simply cannot compete and we can’t say that Europe has rallied behind them in the name of sovereignty.
While model performance benchmarks may be imperfect and ever-changing, usage data tells the same story: No European platform has made a dent globally. And yet, clinging to the illusion that we can still catch up, in October 2025, the European Commission unveiled a €1bn plan to encourage AI across industries. A drop in the bucket of global AI financing, reminding us that hope is not a strategy. (Source: TechCrunch until November 2025. Data compiled until December 2025 from varied sources. Discrepancies may arise from varying methodologies.)
The Draghi Report: false hope
The problem is that leading the foundational model race would have required a genuinely pan-European strategy: coordinated capital, shared infrastructure, and unified ambition. That opportunity is now behind us. Even if mobilized today, Europe could not recover the momentum already lost.
The Draghi Report was meant to change that trajectory. It offered hope that the EU might rethink innovation with a sense of urgency, and presented the outline of a unified momentum. A year later, there is very little to show for it. Structural reforms, capital market integration, and genuine industrial alignment remain largely unrealized.
Yet, not all is lost. While the frontier race is over, acknowledging this reality does not mean surrender. As we begin 2026, there remains a credible path forward, but only if we abandon the illusion that we can still compete at the frontier. The focus must shift towards implementation: 1) building vertical AI companies that use foundational models and 2) encouraging European countries to drive adoption through national AI agendas.
First strategic opportunity: Vertical AI
Europe can still build valuable AI companies by focusing on vertical, industry-specific applications that sit on top of frontier models developed abroad. Unlike horizontal platforms, which are industry-agnostic, vertical AI solutions embed business logic and culture by focusing the vast technological prowess of AI into industry-specific use cases.
By leveraging existing foundational infrastructure, these companies are far cheaper to build. This gives Europe the chance to champion scalable companies such as Helsing, Luminance, Synthesia, and more. Most importantly, vertical AI companies allow incumbent firms to focus on their core mission, outsourcing innovation to specialized AI builders rather than trying to do everything internally. Hospitals, for example, should concentrate on patient care, not on developing internal AI solutions.
Second strategic opportunity: national AI agendas
The diversity of Europe’s economy suggests that there is a place for each nation to set its national AI agenda. Each nation has different strengths and should focus on using them to harness and deploy the solutions that best meet national goals. One size does not fit all and it would be a mistake for this to be driven by Brussels.
The responsibility therefore lies with individual countries. EU member states are better positioned to design AI agendas that align with their economic structures, public services, and the concrete needs of their citizens.
The Luxembourg agenda as an example
Luxembourg is proof that European countries can make sound strategic bets. We have done it before—becoming the first EU member state to allocate part of our sovereign wealth fund to Bitcoin. Now it’s time to do the same with AI. A carefully designed national AI agenda should focus on improving the lives of citizens and our global competitive positioning. But it can also help keep fiscal policy in check—a growing concern amid rising public debt in Europe, to which Luxembourg is no exception.
To drive this forward, Luxembourg must prioritize sectors where AI can deliver high-impact results from the top down. Two industries stand out as credible targets for a national AI implementation strategy.
First, our bread-and-butter sector: finance. As the EU’s leading financial hub, Luxembourg is uniquely positioned to integrate AI into financial services at scale. Minister of Finance, Gilles Roth, is already spearheading this with the creation of an advisory committee dedicated to AI in finance in January 2026. This is a stellar initiative that positions Luxembourg as a trailblazer in AI-driven finance, ensuring that our financial sector remains globally competitive.
Yet, for all its importance, finance largely operates beyond direct government control. Adoption depends on private banks and market actors, not public mandates. To fully exercise the state’s catalytic role, a national AI agenda must, therefore, also target sectors under the direct government sector. Here, I offer healthcare as an ideal starting point.
Globally, the sector leads in vertical AI adoption. Shrinking margins, administrative overload, and staff shortages have pushed hospitals to look for efficiency. When a clinician spends one hour on administrative duties for every five hours of care, there is a clear opportunity for AI-enabled automation. Governments can accelerate adoption by prioritizing healthcare within national AI agendas.
There is already compelling evidence of the significant benefits of AI in healthcare, which go beyond administrative efficiencies to actual improvements in patient care. A recent randomized trial of medical AI, covering over 100,000 Swedish women, demonstrated that radiologists supported by AI outperformed standard double reading without AI—detecting 29% more cancers and reducing radiologists’ workload by 44%. This is the promise of AI in healthcare that a national plan can unlock. By prioritizing healthcare, governments can turn AI into a strategic public investment, one that helps hospitals reclaim staff time, reduce operational frictions, and focus on what matters most: patient care.
Turning the page
Progress often starts with acknowledging what went wrong. Europe has lost the race to lead in foundational AI; those cards have already been dealt.
But the first step toward reversing this decline is precisely to move beyond denial and acknowledge reality. Europe can still make a difference by investing in its capacity to adopt AI. Adoption is not a consolation prize—it represents a sizable opportunity.
By championing vertical AI companies and empowering national AI agendas, Europe can reclaim its place on the global stage and make sure that it focuses on what really matters. There is still a path forward, and the time to act is now.
