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

Think of Saudi Arabia and the first thing that comes to mind might be its massive, oil-derived wealth.

While oil continues to drive Saudi Arabia’s economy, the kingdom is now expanding into areas such as artificial intelligence, tourism and sports to diversify its growth paths.

More than half (50.6%) of the Saudi economy is now “completely decoupled” from oil, according to Saudi Arabian Minister of Investment Khalid Al Falih.

“That percentage is increasing,” Al Failh told CNBC’s Dan Murphy, adding that almost all of the government’s revenues are derived from oil money, but 40% of revenue now comes from sectors and sources that “have nothing to do with oil.”

“We are seeing great results, but we are not satisfied. We want to do more. We want to accelerate the kingdom’s diversification and growth story,” he said.

Saudi Arabia is doubling down on fast-growing sectors such as artificial intelligence, calling it one of its new growth areas. Al Failh says the kingdom will be a “key investor” in developing artificial intelligence applications and large language models. Saudi Arabia will also build data centers “at a scale and at a competitive cost that cannot be achieved anywhere else.”

“Artificial intelligence has emerged [in] The last three, four years and will certainly determine what the future economy of every nation will be like. “Those who invest will be ahead, and those who stay behind will unfortunately lose,” he said.

On Monday, Jonathan Ross, CEO of artificial intelligence chip company Groq, told CNBC: For artificial intelligence infrastructure thanks to energy surplus. Thanks to artificial intelligence, the country could earn more than $135 billion by 2030. According to PwC.

of Saudi Arabia quarterly budget performance report It revealed that total government revenue in the first half of 2025 was 565.21 billion Saudi riyals ($150.73 billion), with oil accounting for 53.4% ​​of the country’s total revenue. 67.97% in the same period of 2019.

The country published a report in 2024. 1.3% increase in full year GDPThis was mainly driven by the 4.3% increase in non-oil segments. On the other hand, oil activity fell 4.5% annually.

The country’s sovereign wealth fund (Public Investment Fund) has bought shares in tech giants, video game publishers and football clubs, while using oil revenues to diversify into other sectors.

PIF buys stake in video game heavyweight Electronic Arts, Establishment of SoftBank Vision Fund with Masayoshi Son SoftBank Group Company Takeover of English Premier League club Newcastle United in 2017 and 2021.

When asked whether falling oil prices were putting pressure on Saudi Arabia’s economy and government revenues, Al Falih said the country did not cut budgets and there were no cuts in public spending.

While oil prices are set to fall in 2025, Brent crude oil spot prices are down 13.4% so far this year, according to FactSet. Saudi Arabia’s oil revenue fell 24% in the first half of 2025 compared to the previous year.

Al Falih stated that the government will continue to address all activities that require government spending, noting that PIF has grown sixfold since its establishment and the capital distributed to the country’s strategically important sectors is approaching approximately $1 trillion.

Tourism has also been a major growth area for Saudi Arabia. The country’s tourism minister, Ahmed Al-Khateeb, told CNBC that the sector’s share of GDP increased from 3% in 2019 to 5% in 2024.

“We [opening] resorts, new airlines, new airports and the numbers are increasing, and we are focusing on foreign countries and visitors to experience our great culture,” Al-Khateeb emphasized.

The tourism minister also expressed confidence that the sector can contribute 10% of GDP by 2030 and will eventually aim to increase this to 20%.

“This 20% will help Saudi Arabia diversify the economy and make it more sustainable,” he added.