Nvidia’s CEO Jensen Huang describes physical AI as “AI that understands the laws of physics,” a niche that has drawn a surge of capital across Europe. Sifted’s new ranking lists the continent’s ten most active clusters, from Berlin and Paris to Milan and Stockholm, each hosting startups that blend simulation, robotics and advanced materials.

Berlin tops the list, buoyed by a recent €3.4 bn funding round that funneled money into hardware‑intensive ventures. Paris follows, leveraging its deep research base and a cascade of EU grants that have lifted local deals into the hundreds of millions. Meanwhile, smaller hubs such as Eindhoven and Graz attract specialist talent, creating a dense network of testbeds for physical‑AI prototypes.

Investors see these hubs as gateways to industries where simulation replaces costly physical trials—automotive, aerospace and energy. The concentration of capital and talent is prompting multinational chipmakers and cloud providers to set up R&D outposts, accelerating product cycles. The list underscores how Europe is shaping a supply chain for next‑generation AI that can model real‑world physics at scale.