Goldman Sachs: European Firms May Lead in AI Application Development

Clif Marriott, co-head of the Technology, Media, and Telecommunications Group in EMEA within Goldman Sachs Global Banking & Markets, put it plainly: "Europe is battling back." "One could say that European tech enterprises are leading in terms of developing AI application layer companies," he said, a key takeaway from the 11th Disruptive Technology Symposium, which brought together more than 1,300 investors and 72 startups in London this March.

Hyperscale technology companies in the U.S. have captured much of the attention when it comes to artificial intelligence, but European companies may hold an edge when it comes to building applications for AI. The distinction matters to anyone tracking where the actual returns in the AI cycle will land: infrastructure spending is dominated by a handful of U.S. giants, while the application layer, where enterprise clients ultimately pay recurring fees, remains up for grabs.

Marriott traces the structural roots of Europe's advantage to the prior decade of fintech. "If you go back over the last 10 to 20 years, where Europe excelled is where it needed to excel," he said. "To scale in Europe, you had to deal with multiple currencies, regulations, and borders." In the U.S., a single product can scale relatively seamlessly, but it may not be as adaptable globally. "Europe has done really well with fintech."

Going forward, Marriott sees the most activity and focus on the creation of AI applications, or the application layer, for companies. Although it is not yet clear Europe will have a winner in the large language model space, there are companies across the continent in the AI application layer that are already performing well and scaling.

The numbers backstopping that enthusiasm are substantial. The number of European unicorns has more than tripled, to 413, since 2016, according to data from Atomico, a London-based venture capital firm, with almost three dozen new unicorns minted in 2025 and early 2026. More than $425 billion has been invested in European tech during the past 10 years, compared with about $45 billion in the prior decade.

The question of AI's ultimate economic value dominated the room. While there are signs of increasing scrutiny on the return on AI investment, much of the symposium audience held the view that the technology is still underhyped. Some 62% of respondents to a poll during the event said AI is underhyped, compared with 58% at the same event in 2024.

Joe Porter, global co-head of software investment banking in the Technology, Media, and Telecom Group in Global Banking & Markets, said that if software today makes a human more efficient or helps achieve some level of automation, then agentic AI will evolve applications, complete the task, and produce outcomes. He chaired a panel at the symposium with executives including a developer, a sales and marketing lead, and someone from a knowledge-work enterprise. The coder on the panel believes there will be as many engineers in the future as today, working alongside AI agents. The salesperson was less confident that as many salespeople will remain, given the automation of many tasks. All panelists agreed, however, that there will always be a human in the loop.

Porter noted that despite the headlines, "the CEOs of incumbent software companies have client trust with distribution, implementation, and long-standing customer relationships that will help them monetize with new features and functionality that are AI driven."

For Goldman Sachs bankers covering technology in EMEA, the symposium's framing signals where deal flow is heading. Marriott observed that while IPOs attract attention, most companies exit through M&A, which he expects to be quite active in the near to medium term. He also noted how much time the firm is spending with private companies that are choosing to stay private longer, not because they cannot go public, but because they can achieve their objectives in the private markets. Goldman Sachs is also doing significant private debt raising for companies investing in AI. For associates and VPs who work on those mandates, that is a clear signal about where the pipeline will be built.