Saudi Arabia is redirecting a significant share of its investment spending away from the $500 billion Neom megaproject and toward artificial intelligence (AI) and advanced technology manufacturing, signalling a major shift in the kingdom’s economic strategy as it seeks to reduce reliance on oil revenue.
The move follows a slowdown in new contracts and construction activity at Neom, the flagship development under Vision 2030. The project, once positioned as a centrepiece of Saudi Arabia’s economic diversification efforts, was notably absent from the government’s 2026 pre-budget statement, its first omission in three years. Sources familiar with the project have reported that construction work on The Line, Neom’s 170-kilometre linear city, has been scaled back, with some workers reassigned to other sites.
AI Becomes Central to New Growth Plans
Saudi Arabia’s renewed focus is now centred on artificial intelligence and digital infrastructure. The government-backed company HUMAIN, launched in May 2025 by the Public Investment Fund (PIF), has been tasked with leading the country’s AI strategy. The company plans to establish a $10 billion venture capital fund to support AI startups across the United States, Europe, and Asia.
HUMAIN has already signed $23 billion in agreements with major U.S. technology firms, including Nvidia, AMD, Amazon Web Services, and Qualcomm, to develop computing infrastructure, data centres, and chip design capabilities. The company’s existing data centre capacity has already been fully allocated, with plans to expand to 6.6 gigawatts by 2034.
Economic Pressures and Strategic Adjustment
The reallocation of funds comes amid lower global oil prices, down more than 10% in London this year, which have placed pressure on Saudi Arabia’s budget. Petroleum continues to account for roughly half of the kingdom’s GDP. Finance Minister Mohammed Al-Jadaan said the government is willing to revise or halt projects that “no longer make sense to continue,” signalling a pragmatic approach to changing market conditions.
The strategic realignment will be a central theme at the Future Investment Initiative (FII) conference in Riyadh from October 27–30, where AI partnerships and investments are expected to dominate discussions. The shift is projected to position Saudi Arabia as a regional technology hub, with AI expected to contribute $135.2 billion to the kingdom’s economy by 2030.
