How Saudi Arabia is diversifying away from oil — and betting big on AI

Saudi Arabia, long synonymous with oil wealth, is now making significant strides to diversify its economy by investing heavily in sectors such as artificial intelligence, tourism, and sports. According to Khalid Al Falih, the Kingdom's Minister for Investment, over half of the Saudi economy is now "completely decoupled" from oil, a figure that continues to rise. Al Falih revealed in an interview that historically, government revenue was heavily reliant on oil; however, currently, about 40% of revenue is sourced from sectors unrelated to oil. "We are witnessing impressive results, but we strive for more. Our goal is to expedite the Kingdom's diversification and growth narrative," he stated. Artificial intelligence is a focal point for Saudi Arabia's growth strategy. The Minister emphasized that the Kingdom intends to be a leading investor in AI applications and large language models. Plans are also underway to construct data centers that promise unparalleled scale and competitive pricing. "AI has emerged prominently in recent years and will undoubtedly shape the future economy of every country. Those who invest will lead, while those who do not risk falling behind," he remarked. Furthermore, industry experts predict that Saudi Arabia could generate over $135 billion in AI-related gains by 2030, according to PwC. In its recent quarterly budget performance report, the Saudi government noted that total revenue for the first half of 2025 reached 565.21 billion Saudi riyals ($150.73 billion), with oil constituting 53.4% of this total, a decrease from 67.97% in the same timeframe in 2019. The country reported a GDP rise of 1.3% in 2024, primarily driven by a 4.3% increase in non-oil sectors, while oil activities saw a decline of 4.5% year on year. The Public Investment Fund (PIF), Saudi Arabia's sovereign wealth fund, has been pivotal in this diversification strategy, acquiring stakes in technology leaders, video game publishers, and even football clubs. Notable investments include Electronic Arts and a partnership with SoftBank’s Vision Fund. When questioned about the impact of declining oil prices on the economy, Al Falih assured that the government would maintain its budget and public spending. Despite a 24% drop in oil revenue in the first half of 2025, he noted that the PIF has grown sixfold since its inception, nearing $1 trillion in capital across various strategic sectors. Tourism, too, is emerging as a vital growth sector. Ahmed Al-Khateeb, the tourism minister, announced that tourism’s contribution to GDP rose to 5% in 2024 from 3% in 2019. The Kingdom is actively developing resorts, airlines, and airports to attract visitors and showcase its rich culture. Al-Khateeb is optimistic that tourism could account for 10% of GDP by 2030, with aspirations for it to eventually reach 20%. "This will significantly aid in diversifying the economy and enhancing its sustainability," he concluded.