Germany invests €1.6 billion in AI but profits remain uncertain

In 2025 alone, €1.6 billion is being committed to AI in Germany as part of its AI action plan.

The budget, managed by the Federal Ministry of Research, Technology and Space, has grown more than twentyfold since 2017, underlining Berlin’s ambition to position the country as a European hub for AI.

However, experts warn that the financial returns remain uncertain. Rainer Rehak of the Weizenbaum Institute argues that AI lacks a clear business model, calling the current trend an ‘investment game’ fuelled by speculation.

He cautioned that if real profits do not materialise, the sector could face a bubble similar to past technology hype cycles. Even OpenAI chief Sam Altman has warned of unsustainable levels of investment in AI.

Germany faces significant challenges in computing capacity. A study by the eco Internet Industry Association found that the country’s infrastructure may only expand to 3.7 gigawatts by 2030, while demand from industry could exceed 12 gigawatts.

Deloitte forecasts a capacity gap of around 50% within five years, with the US already maintaining more than twenty times Germany’s capacity. Without massive new investments in data centres, Germany risks lagging further behind.

Some analysts believe the country needs a different approach. Professor Oliver Thomas of Osnabrück University argues that while large-scale AI models are struggling to find profitability, small and medium-sized enterprises could unlock practical applications.

He advocates for speeding up the cycle from research to commercialisation, ensuring that AI is integrated into industry more quickly.

Germany has a history of pioneering research in fields such as computer technology, MP3, and virtual and augmented reality, but much of the innovation was commercialised abroad.

Thomas suggests focusing less on ‘made in Germany’ AI models and more on leveraging existing technologies from global providers, while maintaining digital sovereignty through strong policy frameworks.

Looking ahead, experts see AI becoming deeply integrated into the workplace. AI assistants may soon handle administrative workflows, organise communications, and support knowledge-intensive professions.

Small teams equipped with these tools could generate millions in revenue, reshaping the country’s economic landscape.

Germany’s heavy spending signals a long-term bet on AI. But with questions about profitability, computing capacity, and competition from the US, the path forward will depend on whether investments can translate into sustainable business models and practical use cases across the economy.

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