Saudi Arabia’s technology sector could see a significant boost in operating profits, potentially reaching SR15 billion ($4 billion) by 2028, thanks to generative artificial intelligence (GenAI), according to a new report.
A study by Strategy& Middle East indicates that tech companies in Saudi Arabia could achieve a 15 percentage point margin growth by developing and commercializing new GenAI applications and meeting demand for advanced hardware and infrastructure.
As part of its Vision 2030, Saudi Arabia aims to become a regional tech hub. The Saudi Data and Artificial Intelligence Authority, established in 2019, is spearheading this initiative to position the Kingdom as a leader in data-driven economies.
Riyadh will host the third Global AI Summit from Sept. 10 to 12, focusing on ethical AI development across sectors like transportation, urban design, mental health, and resource management.
Hani Zein, a partner at Strategy& Middle East, stated that GenAI advancements are expected to impact all sectors in Saudi Arabia, with telecom, media, entertainment, and technology sectors poised for the highest margin growth.
He emphasized that companies should reassess their strategies to explore new growth opportunities.
The report highlights that GenAI can enhance research and development, streamline solution design, and automate processes, potentially reducing costs by up to 30 percent.
Fawaz BouAlwan, another partner at Strategy& Middle East, noted that these efforts could accelerate local intellectual property development and strengthen Saudi Arabia’s position as a tech hub.
GenAI is seen as a catalyst for transformation, offering significant growth opportunities and enhancing internal capabilities.
The media and entertainment sector in Saudi Arabia is projected to achieve a 14 percentage point margin growth by 2028, increasing operating profits by up to SR6 billion.
GenAI is expected to boost Arabic content creation, personalize customer experiences, and improve operational capabilities.
The report also suggests that with current advertising spending per capita at SR240, there is substantial potential to better monetize the customer base, furthering Saudi Arabia’s transformation into a media and entertainment hub.
The telecom sector could see a 12 percentage point margin growth by 2028, increasing operating profits by up to SR11 billion.
GenAI is anticipated to help telecom operators differentiate themselves and tackle challenges related to monetization and competition.
Ali Ghaddar, a principal at Strategy& Middle East, stressed the importance of a value-driven approach for companies to successfully adopt GenAI, including aligning initiatives with business goals, conducting cost-benefit analyses, and ensuring operational readiness.
Ghaddar also emphasized the need for a phased rollout with strong operational guidelines and precise measurement for successful implementation.