Lagarde warns European savings are financing US AI boom

The head of the European Central Bank warned that a large share of European private savings is flowing into US technology firms and indirectly helping to finance the rapid expansion of artificial intelligence in the United States.

Christine Lagarde said euro‑area households hold roughly c440 billion in shares of US tech companies, including Nvidia and Alphabet, and that much of the continent's private wealth remains parked in bank deposits and real estate rather than being channelled into fast‑growing companies at home.

Lagarde told an audience in Vienna that "Companies are being built elsewhere," highlighting the widening gap in AI development between the United States, China and Europe. She noted that in the past year the US produced 59 significant AI models, China 35, while France and the United Kingdom produced one each.

According to an ECB analysis cited by Lagarde, as of May 2026 euro‑area households held nearly  trillion in bank deposits. Households keep about one third of their financial assets in deposits; by comparison US households hold around 11 percent of their financial assets in deposits.

The ECB also estimates that about 80 percent of households in the eurozone do not own stocks, bonds or fund shares. More than 60 percent of households keep most of their wealth in real estate, roughly a quarter rely mainly on bank deposits, about 10 percent invest indirectly through pension and insurance products, and only around 4 percent hold a significant share of their wealth directly in financial markets.

Those patterns, Lagarde warned, mean much European capital is not being mobilised to back companies with high growth potential on the continent. Ben Baringer, head of technology research at Quilter Cheviot, said European capital has moved abroad in part because many leading global tech firms were created and scaled up outside Europe and offer investors greater perceived growth opportunities.

How savings translate into corporate funding

Lagarde and ECB analysis distinguish between buying existing shares and providing fresh capital. When an investor buys a previously issued stock on a secondary market the money typically goes to the selling investor, not the company. However, sustained investor demand can lift a companys market valuation and make it easier for that company to raise new funds by issuing fresh shares, which do put money directly into the companys coffers.

Photo: press material from the event