Saudi Arabia Poised to Become a Global AI Data Center Hub
Saudi Arabia is strategically positioned to become a leading hub for artificial intelligence infrastructure, leveraging its abundant energy resources, according to Jonathan Ross, CEO and co-founder of AI chip maker Groq. Speaking at the Future Investment Initiative (FII) conference in Riyadh, Ross emphasized that the kingdom’s surplus energy enables it to host large-scale AI data centers efficiently, aligning with Saudi Arabia’s Vision 2030 economic diversification plan.
Energy Surplus Drives Data Center Viability
Ross explained the economic advantage of situating AI compute infrastructure in Saudi Arabia: “One of the things that’s hard to export is energy. You have to move it, it’s physical, it costs money. Electricity, transporting it over transmission lines is very expensive.” In contrast, he noted, “Data is very cheap to move. Since there’s plenty of excess energy in the Kingdom, the idea is to move the data here, put the compute here, do the computation for AI here, and send the results.” Ross highlighted the importance of locating data centers where energy is underutilized and land costs are low, making the Middle East an ideal environment for AI infrastructure expansion.
Regional AI Market Growth and Competition
According to PwC, AI could generate $320 billion in economic gains across the Middle East, with Saudi Arabia aiming to capture a significant share through targeted investments and policy support. Saudi Arabia’s AI sector is projected to contribute $135.2 billion to its economy by 2030, representing 12.4% of GDP. However, the United Arab Emirates currently leads regional AI adoption, expected to add $96 billion or 13.6% of GDP by the same year. The CEO of Humain, a state-backed AI and data center operator collaborating with Groq, declared ambitions for Saudi Arabia to become the world’s third-largest AI provider, trailing only the US and China.
Infrastructure and Talent Challenges
Despite the promising outlook, Saudi Arabia faces notable hurdles in developing AI infrastructure. Data centers require substantial cooling, often demanding large water volumes—a critical concern in the kingdom’s arid climate. Additionally, the country has historically experienced shortages in digital skills, with AI expertise being no exception. The government has prioritized upskilling initiatives to address this gap.
Groq’s Partnerships and Investments
Groq is actively engaged in Saudi Arabia’s AI expansion, collaborating with Aramco Digital to develop what it describes as the “world’s largest inferencing data center.” The company’s AI chips, manufactured in New York, are optimized for inference workloads—critical for deploying AI applications at scale. Earlier in 2025, Groq secured $1.5 billion in Saudi investment to accelerate its regional initiatives, including support for the Saudi Data and AI Authority’s large language model tailored to local data.
“It’s optimized for interfacing with the kingdom, so if you need to be able to ask about something here, it has all the data that you need to get the appropriate answers,” Ross said. “Other LLMs haven’t been tuned with such rich local information.”
This focus on localized AI models reflects a broader global trend where countries seek AI systems that understand regional languages, culture, and data nuances.
FinOracleAI — Market View
Saudi Arabia’s abundant energy reserves and strategic Vision 2030 initiatives provide a strong foundation for building a competitive AI data center ecosystem. Collaborations with global technology firms like Groq and state-backed entities signal serious commitment to this goal.
- Opportunities: Leveraging cheap, abundant energy to attract AI infrastructure investments; increasing regional AI market share; fostering localized AI models to serve Middle Eastern data needs.
- Risks: Environmental challenges related to data center cooling in arid climates; talent shortages in AI expertise; competition from neighboring UAE and global AI hubs.
Impact: Saudi Arabia’s AI infrastructure ambitions, supported by significant investments and strategic partnerships, position the kingdom as a rising global AI hub. However, overcoming environmental and talent development challenges remains critical for sustained growth.
