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HomePIFSaudi Arabia’s Major Leap into AI Investment

Saudi Arabia’s Major Leap into AI Investment

A Whopping $40 Billion Allocated for AI Ventures

April 4, 2024
in PIF, Technology
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Saudi Arabia is setting its sights on artificial intelligence (AI) for its next major investment frontier. With a history of investments in global sports teams and significant stakes in entities like Uber, the kingdom plans to channel a substantial $40 billion into the realm of AI.

Discussions have been underway between representatives from Saudi Arabia’s Public Investment Fund and the prominent Silicon Valley venture capital entity Andreessen Horowitz to explore potential collaborative ventures.

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The financial demands for developing and training sophisticated large language models are substantial, and the investment community is showing a keen interest in supporting companies that specialize in such technologies, especially following the triumphs of OpenAI. Research by AIM indicates a marked increase in funding for AI startups in the United States, escalating from $22.7 billion in 2022 to $36.7 billion in 2023.

The proposed $40 billion fund from Saudi Arabia would eclipse the typical funding rounds amassed by firms venturing into AI. For perspective, OpenAI’s competitor Cohere has engaged in discussions to raise funding up to $1 billion. Meanwhile, the AI developer Anthropic has secured a $4 billion investment from Amazon, and Elon Musk’s xAI is on the quest for up to $6 billion to be competitive in the AI space.

Andreessen Horowitz is no stranger to the AI startup ecosystem, with investments in diverse companies such as the synthetic voice creator ElevenLabs, data platform Databricks, and the healthcare AI venture Hippocratic AI.

The Kingdom has previously invested a hefty $45 million in SoftBank’s Vision Fund, a multi-billion-dollar initiative focused on technology firms. This fund has placed bets on various AI-focused companies, including semiconductor giants Arm and Nvidia, robotic process automation firm Automation Anywhere, and autonomous vehicle innovator Cruise.

Saudi Arabia is not only investing abroad but is also nurturing its domestic AI market. Since initiating a strategy in 2020 to enhance the nation’s AI and data capabilities, the country has become a breeding ground for AI startups such as Lucidya, offering AI-driven solutions for customer experience management, and Thya Technology, specializing in computer vision services.

Major cloud service providers have also taken notice of Saudi Arabia’s potential, with AWS announcing a dedicated infrastructure region following the Leap 2024 technology conference. Microsoft and Google Cloud have already expanded their cloud services within the kingdom.

This surge in AI investment is part of Saudi Arabia’s broader strategy to diversify its economy, reducing reliance on oil revenues. The country’s recent investments span various sectors, including the acquisition of the English soccer team Newcastle United, stakes in Uber, luxury electric vehicle maker Lucid Motors, and the Indian telecom giant Jio.

Tags: AI investmentartificial intelligencePublic Investment Fundsaudi arabiaventure capital
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