Generative AI (GenAI) is poised to significantly transform various sectors across Saudi Arabia, potentially driving substantial increases in operating profits by 2028, according to new research from Strategy& Middle East, which has analysed the impact of GenAI on key sectors within the Kingdom.
The research highlights that adopting GenAI could help the telecom, media entertainment, and technology sectors in Saudi Arabia achieve the highest potential margin growth.
“Advancements in GenAI are expected to impact all sectors in Saudi Arabia,” noted Hani Zein, Partner with Strategy& Middle East. “Our analysis indicates that the telecom, media & entertainment, and technology sectors could achieve the highest potential margin upside by adopting GenAI.
“This presents a prime opportunity for companies to reassess their strategies and explore new avenues for growth and innovation.”
Technology
The technology sector stands to benefit the most from leveraging GenAI, with the potential to increase its operating profit by up to SAR 15 billion by 2028. This growth is expected to be driven by the development and commercialisation of new use cases and the rising demand for advanced hardware and infrastructure necessary for GenAI. Additionally, Saudi tech firms could streamline their research and development (R&D) capabilities, enhance solution design, and automate internal processes, reducing costs by up to 30%.
“These efforts can help to accelerate the development of local intellectual property and solidify Saudi Arabia’s position as a hub for national tech champions,” explained Fawaz BouAlwan, Partner with Strategy& Middle East. “GenAI can be the essential catalyst in accelerating this transformation, creating major growth opportunities, and enhancing internal capabilities.”
Media and entertainment sector
The media and entertainment sector in Saudi Arabia could see an increase in operating profit of up to SAR 6 billion by 2028. GenAI is expected to allow firms in this sector to develop more original Arabic content, personalise customer experiences, and improve operational capabilities. The sector could also better monetise its customer base, with advertising spending per capita currently at up to SAR 240. This could further establish Saudi Arabia as a media and entertainment hub, aligning with the Kingdom’s national agenda.
Telecoms
The telecoms sector could achieve an operating profit increase of up to SAR 11 billion by 2028. GenAI could help telecom operators gain deeper insights into broadband customers, tailor their value propositions, and improve infrastructure utilisation. By analysing customer behaviour, telecoms could also personalise campaigns and enhance cross-selling opportunities, particularly within the small and medium-sized enterprises (SME) market, projected to reach SAR 10 billion by 2028.
Strategy for adopting GenAI
The adoption of GenAI is seen as a critical step in achieving the goals of Saudi Vision 2030. By enhancing profitability and operational efficiency, GenAI could contribute to the Kingdom’s broader economic transformation, positioning Saudi Arabia as a hub for technology, media, and telecommunications.
The report from Strategy& advises that companies aiming to benefit from GenAI should adopt a value-driven approach that aligns technological initiatives with business goals. This approach involves conducting cost-benefit analyses and ensuring operational readiness across the organisation. For companies to harness GenAI’s benefits effectively, a phased rollout, supported by strong operational guidelines and tracked through precise measurement, is recommended.
“To successfully embrace GenAI, companies must adopt a value-driven approach that delivers tangible benefits beyond technological innovation,” said Ali Ghaddar, Principal with Strategy& Middle East. “This begins with synchronising GenAI initiatives to business goals, performing thorough cost-benefit analyses, and driving operational readiness throughout the organisation.
“A phased rollout, governed by strong operational guardrails and tracked by precise measurement, will be crucial.”
Generative AI presents a significant opportunity for various sectors in Saudi Arabia to increase their operating profits and streamline operations by 2028. As sectors such as technology, media and entertainment, and telecoms stand to gain the most, companies are encouraged to strategically align their GenAI initiatives with broader business objectives to fully realise the potential of this technological advancement.
