AI use has increased due to the growing popularity of the digital economy, which is reshaping entire industries and transforming national economic structures. Although it can enhance productivity and induce innovation, widespread adoption of AI technology entails challenges in areas of infrastructure, governance, and compliance. Thus, to continue to grow in such a context of constant evolution these concerns must be addressed. Herein, this study creates a composite index to assess AI and digitalization readiness at the country level using data from 28 European countries sourced from Eurobarometer 95.2 (2021). The Partial Least Squares (PLS) and Principal Component Analysis (PCA) were used to build composite indicators of AI and digitalization readiness across European countries. Furthermore, Elastic Net regression was used in order to improve feature selection and the prediction performance. Our findings demonstrate varied country profiles of AI and digitalization readiness, emphasizing differences in legislative frameworks, ethical issues, and digital transformation initiatives. This study gives policymakers and stakeholders a formal, quantitative approach to assessing AI and digitalization readiness on a large scale, providing useful information for guiding future AI policies.