Arab world carves out a niche in crowded AI market

It is undeniable that, as of today, the Arab region is viewed mainly as an avid consumer of technology, not a manufacturer or an innovator. Despite young Arabs’ natural affinity for smart devices and gaming and their addiction to digital platforms and social media, it is rare to come across a cool tech gadget assembled or manufactured in an Arab country.

But that imbalance between consumption and creation is set to narrow — and soon. As the world rapidly embraces artificial intelligence, the initiatives some Arab countries are undertaking in terms of research, development and investment have the potential to transform the destiny of the region.

Middle Eastern sovereign wealth funds have increased their AI investments an estimated fivefold in the past year, with Saudi Arabia and the UAE leading the regional push. This strategy aligns with the two countries’ broader economic diversification efforts, which are aimed at reducing dependence on oil and gas by investing heavily in AI and other cutting-edge technologies. Indeed, both Arab Gulf states have made bold moves in recent years to position themselves as global AI leaders through a combination of strategic investments, farsighted policies and international partnerships.
They are utilizing their oil wealth to build AI ecosystems through multibillion-dollar funding, the establishment of strategic ministries and tie-ups with tech giants such as Google and Microsoft. Saudi Arabia aims for AI to contribute 12 percent of its gross domestic product by 2030, while the UAE projects a $96 billion boost from AI adoption over the same period. Other Gulf nations have signaled an interest in tech investments, though specific incentive figures remain unconfirmed.
In today’s continuously evolving digital environment, where the average shelf life of skills is estimated to be less than five years, building a future-ready workforce is easier said than done. By equipping their science and engineering graduates with expertise in AI development, automation principles and data science methods, the Gulf countries hope to nurture a generation of entrepreneurs who can build AI-powered solutions tailored to public and private sector needs.
Saudi Arabia dominates in financial scale and infrastructure, while the UAE excels in policy innovation and private sector growth. Both aim to position the region as a global tech corridor, rivaling Silicon Valley, by reducing reliance on hydrocarbons and building sustainable knowledge economies. Last November, Saudi Arabia launched Project Transcendence, a $100 billion AI initiative to build data centers, support startups and develop infrastructure. This initiative aligns seamlessly with the Kingdom’s Vision 2030 strategy to diversify away from oil.

The initiatives some Arab countries are undertaking have the potential to transform the destiny of the region. 

Arnab Neil Sengupta

The country’s sovereign wealth fund, the Public Investment Fund, valued at more than $900 billion, is no longer merely an investor in Uber, Zoom, Live Nation and Activision Blizzard. It has also become a driving force behind AI development through the Saudi Company for Artificial Intelligence, which focuses on large-scale AI deployments. In 2019, Saudi Arabia established the Saudi Data and AI Authority to oversee its national AI strategy. Since then, it has partnered with Google to invest up to $10 billion in Arabic-language AI models and localized applications. The PIF is in negotiations with US investors for a $40 billion AI fund, underlining its intention to be a key player in the AI sector.
In 2017, the UAE became the first country in the world to appoint a minister of state for AI, Omar Sultan Al-Olama. It also created the Artificial Intelligence, Digital Economy and Remote Work Applications Office to implement its National Strategy for Artificial Intelligence 2031. This office has been collaborating with companies like Samsung and UiPath to deploy AI solutions across government services. Since 2019, the UAE has established the Mohamed bin Zayed University of Artificial Intelligence, which produced more than 300 AI research papers in 2024, and launched blockchain initiatives to strengthen its tech ecosystem.
Additionally, Abu Dhabi has launched a $10 billion fund targeting AI and other sectors, with its state-backed entities G42 and Mubadala Investment Company emerging as key Gulf investors in AI-driven projects ranging from climate modeling to semiconductor development. MGX, which is backed by Mubadala and G42, has partnered in fundraising efforts for OpenAI and Anthropic, while pursuing investments in AI infrastructure and semiconductor manufacturing.
MGX’s investment areas range from AI core technologies to advanced applications in fields such as software, data, life sciences and robotics. By tapping into Abu Dhabi’s deep financial resources and global partnerships, it aspires to become a dominant player in the AI and advanced technology landscape.
These bold and strategic moves by Saudi Arabia and the UAE will result in a shift in global perceptions of the Arab region’s role in tech research and development. The hope is that, as these initiatives mature, the Arab world will get an opportunity to transition from being an adopter to a developer of cutting-edge technologies. By nurturing AI talent today, Arab countries are laying the groundwork for homegrown innovators who will power tomorrow’s digital economy.

• Arnab Neil Sengupta is a senior editor at Arab News. X: @arnabnsg