Look Forward — 2 December 2025
The Saudi Arabia data center market: A catalyst for economic innovation
Saudi Arabia is experiencing a digital transformation as it seeks to diversify its economy.
By Mai Barakat
Highlights
The Saudi Arabia data center market is poised for significant expansion as the kingdom transforms its economy. This growth stems from both market forces and targeted government policy. The kingdom's Vision 2030 plan seeks investment to diversify the economy beyond oil dependence.
Increases in operations by hyperscale providers like AWS, Microsoft and Oracle are driving cloud computing in Saudi Arabia. As these organizations build their market presence, they require scale and efficiency, encouraging a trend toward wholesale data centers.
Aiming to emerge as a global technology hub, the kingdom is investing in AI and developing Arabic large language models. Government initiatives seek to develop expertise in AI and cloud computing, supporting Saudi Arabia's digital transformation.
Dammam, Riyadh and Jeddah are becoming the country's data center sites of choice. Each of the three cities has unique advantages, such as location, access to resources, and well-established infrastructure, making them desirable sites for digital and cloud services investment.
The Saudi Arabia data center market is rapidly becoming central to the kingdom's digital economy. The data center sector's megawatt load is projected to expand at a 29% growth rate from 2024 through 2030, driven by Vision 2030 initiatives, ambitious AI investments, and the country's abundant energy resources. As global hyperscalers commit billions of dollars to increase capacity and regulatory reforms attract unprecedented foreign investment, data centers are positioning the kingdom for regional and global competitiveness while accelerating economic diversification beyond oil dependence.
Saudi Arabia data center market leaders emerge as competition intensifies
Leading companies in the Saudi Arabia data center market include Center3, Damac Data Centers and Quantum Switch Tamasuk, which provide retail and wholesale capacity. Quantum Switch Tamasuk, DataVolt and ZeroPoint DC plan to develop large facilities, with Quantum Switch Tamasuk and DataVolt particularly well-positioned to capture significant capacity market share. Meanwhile, emerging state-backed Humain has the potential to transform the shape of the country's established data center market.
Established as a Saudi Telecom Company affiliate, Center3 focuses on colocation, cloud, and managed IT services while leveraging STC's extensive infrastructure. Damac Data Centers was established under Damac Properties to expand its portfolio with cloud and colocation data center facilities. Tamasuk and Quantum Switch formed the joint venture Quantum Switch Tamasuk to deliver colocation and cloud services. Other key market players include Gulf Data Hub, which enables large-scale data center spaces for disaster recovery and colocation; Ezditek, which offers IT to help local companies digitize; DataVolt, a data center subsidiary of Saudi Arabia investment holding company Vision Invest; and Mobily, a brand name of telecommunications company Etihad Etisalat, which is also expected to expand its data center assets. ZeroPoint DC, Tonomus and Humain also entered the market recently to focus on hyperscale and AI facilities for cloud providers.
Humain is coordinating many of the kingdom's major AI infrastructure projects, with a goal of handling about 6% of the world's AI workload. Planned Humain data centers near Riyadh and Dammam could deliver 6.6 gigawatts of capacity by 2034, potentially representing exponentially more than the rest of the market combined.
Data center potential marked by rapid expansion
The Saudi Arabia data center market is showing strong momentum, with the sector's load of megawatts of information technology power projected to increase at a 29% compound annual growth rate (CAGR) through the 2024 to 2030 forecast period. As of the first quarter of 2025, the Saudi Arabia data center market had an estimated total IT power capacity of 222 MW, with plans to add an additional 760 MW by 2030.
The market is concentrated in two main locations. Riyadh, the capital, serves as the kingdom's economic and political hub. Dammam, in proximity to the major oil fields, is currently transforming its energy industry into a digital economy. Meanwhile, major port city Jeddah provides varied prospects for innovation and commerce.
As Saudi Arabia pursues its digital transformation, both established operators and new market entrants must address key challenges. These include the necessity of rapid infrastructure build-out to match increasing demand, and balancing growth expectations with feasible build-out capacity due to supply chain constraints and insufficient construction and operating expertise. Additionally, new strategic and large-scale data center projects require the approval of the Public Investment Fund, Saudi Arabia’s sovereign wealth fund, which seeks to balance the support of digital development with the management of fiscal priorities.
As of September 2025, the UAE had the most IT power in the Middle Eastern data center market, with Saudi Arabia ranking second. However, if all the announced plans proceed, Saudi Arabia is set to have one of the region's fastest-growing digital economies. The ultimate market leadership depends on future developments in both countries.
Saudi Arabia's data center ambitions will also facilitate broader Vision 2030 infrastructure targets, particularly the construction and expansion of desalination plants to provide adequate cooling. While the country's primary water needs stem from population and economic growth, data centers add significant additional demand pressures to already strained resources. The country's data centers reportedly required 15 billion liters of water in 2024 and could face water scarcity threats due to aridity, excessive use of costly desalinated water, and cooling demands in the hot climate. As competition and water costs escalate, the country's data centers will need to make their growth sustainable by adopting water-efficient or dry-cooling technologies and other water-supply alternatives.
Vision 2030: Blueprint for a digital economy
Saudi Arabia has invested heavily in information and communications technology (ICT), with the government keen on digital transformation as a policy pillar. The Kingdom's Vision 2030 plan aims to diversify the economy by developing sectors including healthcare, education, infrastructure, tourism and entertainment. Key objectives include growing the private sector, establishing strong digital infrastructure, and attracting varied foreign investment.
The investment program associated with Vision 2030 dominates the country's fiscal outlook. S&P Global Market Intelligence expects Saudi Arabia's investment-to-GDP ratio to stay high for the next five to 10 years, particularly because of the likely increase of the private sector’s share, including Saudi Arabia's data center market investment.
The 2019 creation of the Saudi Data and Artificial Intelligence Authority (SDAIA) further demonstrated the country's focus on data management and analytics, as well as smart city initiatives. The related ICT infrastructure requirements present opportunities for rapid business expansion.
In 2021, Saudi Arabia's government also committed to enhancing the ICT sector by launching the National Industrial Development and Logistics Program (NIDLP), which supports digitization and data center infrastructure investment as part of the broader Saudi Arabia digital transformation.
New rules welcome global investors
Saudi Arabia is encouraging private sector growth and foreign investment with a series of initiatives to attract foreign business. Recent reforms have included the 2020 introduction of new foreign ownership laws and the 2016 establishment of special economic zones (SEZs) to support technology and infrastructure investment under the Vision 2030 initiative. The SEZs stimulate growth through incentives enabling 100% foreign ownership, complete repatriation of profits, and elimination of some import/export duties. The zones target major companies as well as startups and small and medium-sized enterprises.
The government has also launched a long-term residency program that allows outside investors and skilled expatriates to work and live in the country without requiring a local sponsor. The initiative aims to strengthen the workforce and improve Saudi Arabia's economic diversification and global competitiveness.
Saudi Arabia's foreign direct investment inflows have risen from about $5.3 billion in 2020 to more than $31 billion by 2024. Vision 2030 sets foreign direct investment goals that are unlikely to be fully met by the plan's target year, but the country's foreign investment attractiveness has risen. S&P Global Market Intelligence expects the country's annual foreign direct investment inflows to remain greater than $20 billion in 2025 and beyond.
Saudi Arabia's energy advantage catalyzes AI data center expansion
Power availability is a key factor in the global build-out of AI data centers, and Saudi Arabia is no exception. While many developed data center markets struggle to cope with power supply constraints, Saudi Arabia is leveraging its abundant energy resources as part of its AI positioning. The country has an extensive power generation and transmission network, with an installed capacity of more than 400 TWh annually. This capacity is well above current demand and can serve AI facility energy needs. About 60% of the energy comes from natural gas and oil, but renewable resources' share is increasing. The Vision 2030 initiative targets obtaining 50% of electricity from renewables by 2030, with significant progress in solar and wind energy. However, given renewable energy's intermittency, Saudi Arabia plans to utilize its current natural gas infrastructure to supply reliable data center power without interruption.
Saudi Arabia is also in an initial planning phase for nuclear power generation, which may contribute to its energy mix. In the meantime, however, the country holds a relative advantage in the relatively low price and flexible supply of its natural gas-fired power. Compared to global AI clusters — nuclear-powered France, renewables-capable Spain, or emerging African markets including South Africa and Kenya — Saudi Arabia offers a more centralized, government-backed energy policy that reduces permitting requirements and enables faster infrastructure deployment. Subsidies and government-regulated pricing also contribute to keeping electricity prices generally lower, reducing hyperscale data center providers' operating costs.
In addition, locating data centers near major power generation facilities or emerging developments like Neom reduces transmission loss and ensures reliable supply — an essential consideration as AI infrastructure grows in demand and complexity.
Cloud giants bet on Saudi Arabia's digital future
Major players are accelerating cloud computing in Saudi Arabia. In 2020, Oracle launched a cloud region in Jeddah to deliver services to local businesses. In 2024, the company launched a second region in Riyadh. SAP has launched cloud computing data centers in Riyadh and Dammam to support the digital transformation of local businesses. In 2022, Alibaba Cloud partnered with STC to establish two Riyadh data centers. In 2024, AWS announced plans to build a new Saudi Arabia cloud region, scheduled to launch in 2026, providing cloud services to businesses and government agencies locally. Microsoft has built three data centers, also set to open in 2026, to launch availability zones in Saudi Arabia's Eastern Province.
In May 2025, the Saudi government announced the launch of the Humain project, an AI startup backed by the country's Public Investment Fund as part of establishing the market as a global AI center. Humain's aims include supporting data center infrastructure build-out, developing Arabic large language models, and attracting global AI investment. NVIDIA has partnered with Humain on a $10 billion investment plan to develop new data centers in the country. Under the agreement, NVIDIA will supply 18,000 of its newest-generation Blackwell chips to run in an announced 500 MW of capacity in the Saudi Arabia data center market. Humain has also announced a $5 billion partnership with Amazon Web Services and has deals and investment commitments involving other major tech firms. Additional partnerships are under discussion, including potential computing power arrangements with Elon Musk's xAI.
While these agreements signal a strong AI commitment, becoming a regional tech juggernaut will require Saudi Arabia to provide more data center capacity, more GPUs and, perhaps even more importantly, strong legal and regulatory frameworks such as data sovereignty regulations.
Looking forward
The Saudi Arabia data center market should experience a continued growth curve, with hyperscalers driving cloud computing and data center demand.
The country already has significant assets in its strategic location, strong terrestrial connectivity, and investments in subsea cables, 5G, fixed wireless access and the Internet of Things. Government initiatives, including reduced electricity rates and tax incentives for some projects, will further support the development of the country's data center sector. Meanwhile, requirements for the Saudi Public Investment Fund to approve new strategic or large-scale data center projects will serve as another important market factor.
Although Saudi Arabia's large-capacity data center ambitions face challenges, including water constraints, high costs, regulatory considerations, and infrastructure limitations, forecasts indicate robust growth potential. The country's push to develop a regionally and globally competitive tech economy should continue to yield strong projected sector-level compound annual growth rates, with the Saudi Arabia data center market solidly positioned to drive digital transformation.
Contributors: Ralf Wiegert and Jack A. Kennedy
This article was authored by a cross-section of representatives from S&P Global and in certain circumstances external guest authors. The views expressed are those of the authors and do not necessarily reflect the views or positions of any entities they represent and are not necessarily reflected in the products and services those entities offer. This research is a publication of S&P Global and does not comment on current or future credit ratings or credit rating methodologies.
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