Generative AI (GenAI) is rapidly becoming a transformative force in Saudi Arabia, with the potential to significantly reshape multiple industries across the Kingdom. According to a new report from Strategy& Middle East, a member of the PwC network, early adopters of GenAI stand to gain a substantial competitive edge, as the technology continues to revolutionize content creation, coding, and data analysis.
The research, which examines the potential impact of GenAI on operating profits across various sectors in Saudi Arabia by 2028, highlights how different industries can harness this technology to drive growth and innovation. The findings are detailed in an interactive microsite, providing a sector-by-sector breakdown of GenAI’s anticipated impact.
“Advancements in GenAI are set to influence every sector in Saudi Arabia,” said Hani Zein, Partner at Strategy& Middle East. “Our analysis shows that the telecom, media & entertainment, and technology sectors could experience the most significant margin improvements through GenAI adoption. This presents an exciting opportunity for companies to rethink their strategies and explore new avenues for expansion.”
Technology Sector:
The technology sector in Saudi Arabia is poised to benefit the most from GenAI, with the potential to increase operating profit margins by 15 percentage points by 2028. This could translate into an additional SAR 15 billion in operating profit. Saudi tech companies can capitalize on this growth by developing new GenAI applications, meeting the rising demand for advanced hardware and infrastructure, and accelerating research and development efforts. The sector’s ability to streamline operations and reduce costs by up to 30% will be critical in maintaining its competitive advantage.
“These initiatives will help solidify Saudi Arabia’s position as a hub for technological innovation and intellectual property creation,” noted Fawaz BouAlwan, Partner at Strategy& Middle East. “GenAI can serve as a key catalyst in driving this transformation, unlocking significant growth opportunities and enhancing the sector’s capabilities,” he added.
Media & Entertainment Sector:
The media and entertainment sector is also expected to see substantial benefits from GenAI, with a projected margin growth of 14 percentage points by 2028, potentially increasing operating profit by up to SAR 6 billion. Companies in this sector can leverage GenAI to produce more original Arabic content, offer highly personalized customer experiences, and improve operational efficiency. The research suggests that with an advertising spending per capita of up to SAR 240 in Saudi Arabia, there is significant potential for media and entertainment firms to better monetize their audiences, furthering the Kingdom’s goal of becoming a regional media hub.
Telecom Sector:
In the telecom sector, GenAI is forecasted to drive a margin growth of 12 percentage points by 2028, with an expected increase in operating profit of up to SAR 11 billion. Telecom operators can use GenAI to gain deeper insights into customer behavior, tailor value propositions, and optimize broadband infrastructure, which currently has a utilization rate of around 50% for fiber-to-the-home (FTTH) in Saudi Arabia. By refining customer segmentation and offering customized product portfolios, telcos can better navigate market challenges, including price wars and monetization issues.
“To fully leverage GenAI, companies must align their initiatives with business objectives and ensure that these technologies deliver measurable value,” said Ali Ghaddar, Principal at Strategy& Middle East. “A phased implementation, supported by strong operational frameworks and precise performance metrics, will be crucial for success,” stated Ghaddar.
The report underscores the transformative potential of GenAI across key sectors in Saudi Arabia, highlighting the importance of strategic adoption to unlock long-term value and maintain competitiveness in a rapidly evolving market.
Klumi Ventures And Fuze Team Up To Propel ADGM’s Web3 Landscape
