Gulf urged to seize next phase of AI with homegrown products

• $15bn of AI business announced at Leap
• GCC must move to commercial phase
• ‘Application side’ will drive AI economy

Gulf countries need to turn their huge investment in AI infrastructure into homegrown products that put the fast-growing technology to commercial use, according to a major new study.

Abir Habbal, regional data and AI lead for consultancy Accenture and report co-author, said the GCC needed to seize the second phase of its AI development after years spent building computing capacity, data capabilities and the foundations for AI sovereignty.

More than $15 billion of AI and advanced technology investments, launches and partnerships were announced at the Leap technology conference in Riyadh this week. Not all represented foreign direct investment, but the scale highlighted the amount of money flowing into the sector.

The report, Architecting Sovereign AI in the Middle East, covers Saudi Arabia, the UAE and Qatar. It found 60 percent of executives described their countries’ approach to AI sovereignty as “highly sovereign”.

However, 62 percent said local sovereign AI offerings lag those available from global hyperscalers.

“We went through a first phase of building the foundations,” Habbal told AGBI at Leap in Saudi Arabia.

“We’re going into a second phase of building end-user products across sectors that will help transform the economy.”

Habbal said the next opportunity was at the “application side” of AI.

Applications sit at the business end of the AI technology stack, where computing power, data and AI models are turned into services with real-world uses.

Local language, cultural context, regulatory alignment and sector-specific requirements provide the greatest differentiation and value for the Gulf, the report said.

“The part that’s going to drive your AI economy is the application side, because this is where you allow it to impact every sector in your economy,” Habbal said.

She said the next step was to build “the industrial products when it comes to energy, logistics, health and beyond”, and export them internationally.

From compliance to commercial returns

Accenture found that 57 percent of Middle East data and workloads have already moved to sovereign cloud environments.

However, the research also highlighted the challenge of translating that progress into commercial returns.

Sixty-two percent of regional organisations said regulatory compliance was their main reason for pursuing sovereign AI, while only 7 percent cited monetisation or cultural alignment.

Only 10 percent have elevated AI sovereignty to a CEO- or board-level concern.

“Sovereignty has been viewed as a compliance agenda,” Habbal said.

She said developing local AI products, intellectual property, talent and software could provide a competitive advantage.

“When you’re able to build your local AI solution, your own IP with your talent, your code, that is a big differentiator in the market.”

Saudi Arabia and the UAE have sought to develop national AI champions alongside partnerships with international technology companies.

Habbal pointed to Humain, owned by Saudi Arabia’s Public Investment Fund, and G42, the Abu Dhabi technology group backed by sovereign wealth fund Mubadala.

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She said developing domestic capabilities did not mean Gulf countries needed to build every component of AI themselves or move away from international partners.

“The objective is not to eliminate reliance on global providers,” Habbal said. “The objective is to make sure that no one can switch AI in the region off.”

Advanced chips and computing power were areas where international partnerships would remain particularly important.

“Compute today sits with the US and China,” she said. “Hence we continue to rely on partnerships when it comes to that level.”

The research covered 185 respondents, including 85 each in Saudi Arabia and the UAE and 15 in Qatar, as part of a wider global survey of almost 2,000 business and government leaders across 28 countries.