• U.S. manufacturing companies invest 2.9 percent of their revenue in artificial intelligence, while German companies invest only 0.6 percent.

• Weak data foundations and insufficient capabilities are slowing AI scaling efforts in Germany. Costs are not yet the primary challenge.

   

Germany's manufacturing sector risks falling significantly behind the United States when it comes to investments in artificial intelligence. In 2026, U.S. manufacturing companies are investing an average of 2.9 percent of their revenue in AI, compared with just 0.6 percent among German manufacturing companies. As a result, the investment rate in the United States is nearly five times higher than in Germany. These are the findings of an analysis conducted by management consultancy Horváth.

"The nearly fivefold investment gap is a clear warning signal for Germany as an industrial hub," says Dr. Matthias Emler, Partner at Horváth. "While nine out of ten German companies are significantly increasing their budgets for AI and big data, they are starting from a comparatively low baseline. The current pace of investment is still insufficient to keep up with U.S. competitors."

Weak Data Foundations and Skills Gaps Hold Back German Companies, Not Costs

The investment gap vis-à-vis the United States cannot be explained by a lack of willingness to invest alone. German companies face greater structural challenges when implementing AI initiatives. On a scale of up to four points, they rate deficiencies in their data foundation as the most significant challenge of AI transformation, assigning a score of 3.19. In the United States, the corresponding score is 3.04. Skill shortages are also considered slightly more critical in Germany, where executives rate this challenge at 3.14 points compared with 2.91 among their U.S. counterparts. Investment and software costs, by contrast, rank only sixth among the greatest challenges in both Germany and the United States. This indicates that success depends not only on the amount of capital companies invest, but also on their ability to develop AI applications on a robust data foundation, integrate them into existing processes, and scale them across the organization.

"What companies need above all is the ability to embed AI organizationally and secure acceptance among managers and employees," says Horváth expert Emler. "Sustainable business value emerges only when AI becomes an integral part of day-to-day decision-making and operational processes."

Manufacturers Invest More Cautiously Than Service Providers

A comparison across economic sectors reveals a substantial gap. Manufacturing companies plan to increase their AI investments from an average of 0.4 percent of revenue in 2025 to 0.7 percent in 2027. In the service sector, the corresponding share is expected to rise from 0.6 percent to 2.9 percent over the same period. Service companies are therefore investing in AI at a significantly faster pace than manufacturing companies.

One reason is that many service-sector processes are more standardized, data-driven, and easier to scale. For German manufacturing companies, however, the challenge is particularly complex. They must integrate AI into sophisticated production environments, existing IT and machinery landscapes, and global supply chains. As a result, implementation efforts are often more complex and capital-intensive. At the same time, the potential of Industrial AI is substantial, including applications such as automated quality control, intelligent production planning, AI-supported research and development, predictive maintenance, and the use of autonomous and collaborative robotics to further automate and increase the flexibility of manufacturing processes.

Companies Expect Double-Digit Productivity Gains

Across all industries, companies expect AI to deliver double-digit productivity improvements over the next three years. The highest gains are anticipated in IT and digitalization, where companies expect average productivity improvements of 14.7 percent. Finance and controlling follow at 13.2 percent, while sales and marketing are expected to achieve gains of 12.4 percent.

Looking at manufacturing companies, the greatest benefits are expected in IT and digitalization at approximately 14.0 percent and in finance and controlling at around 13.2 percent. The manufacturers surveyed also anticipate productivity increases of approximately 12.1 percent in operational processes.

Service-sector companies expect gains of approximately 15.4 percent in sales and marketing, 15.5 percent in IT and digitalization, and 8.8 percent in operational processes.

Many Applications Fail to Progress Beyond the Implementation Stage

Companies have made progress in AI maturity compared with the previous year. The most advanced use cases are found in operational and administrative processes. Significantly lower levels of maturity remain in management decision-making, innovative products and services, and end-to-end processes. Fully integrated AI applications remain the exception across nearly all areas examined. This is particularly true for manufacturing companies. Many manufacturers have developed structured approaches or implemented isolated use cases, but organization-wide scaling remains rare. As a result, the low proportion of fully integrated solutions stands in sharp contrast to the anticipated productivity gains and the investment pace of U.S. competitors.

"The comparison between Germany and the United States highlights a dual challenge: German companies invest substantially less while simultaneously facing greater difficulties related to technology access, capabilities, and organizational integration," says Dr. Matthias Emler, Partner at Horváth. "To close the gap, organizations must increase their budgets, consolidate investments more effectively, and manage AI consistently with business outcomes in mind. At the same time, they must take an entrepreneurial and bold approach to implementation. Those who wait for the perfect moment risk falling behind."

About the Study

The study on AI investments surveyed more than 1,000 board members and senior executives from large companies across more than 30 countries and over 15 industries. Four out of five participating companies generate annual revenues of more than EUR 100 million. Manufacturing companies account for the largest share of respondents. Data collection was completed at the end of the second quarter of 2026.