Germany's SME firms 'Mittelstand' cuts AI investments in 2025, study shows

Germany's small and medium-sized companies, ‍collectively known as ​the Mittelstand, are putting the brakes ⁠on artificial intelligence (AI) investment, a study showed, even as overall corporate spending on AI applications rises.

In a survey ‌of 200 ‌Mittelstand firms published on Thursday, management consultancy Horvath found these ‌companies spent 0.35% of their revenues on AI technologies in 2025, down from 0.41% in 2024.

By contrast, average AI spending across all companies increased ​to 0.5% of revenues in ​2025 from 0.40% a year earlier, widening ‌a gap ‍that Horvath said leaves the Mittelstand ‍investing about 30% below the overall market.


"Geopolitical ‌tensions have unsettled many mid-sized companies and shifted their focus toward cost optimisation," said Heiko Fink, the study lead and a member of Horvath's management board.

He added that early AI use cases may not ‍have delivered the efficiency gains companies had hoped for.

"If AI transformation is not ‍massively accelerated ⁠now, the ⁠technology gap will develop into an existential strategic risk," Fink said.

The report said bureaucratic hurdles and slow progress on digitalisation are weighing heavily on the ability of mid-sized firms to implement AI, while concerns about data protection and digital sovereignty are also holding back deployment.