Saudi Arabia Emerges as the Middle East’s Data Hub, Driven by AI, Cloud, and 5G Expansion

The Saudi Arabian data center market is entering a new era of rapid expansion and technological innovation. Valued at USD 1.6 billion in 2024, the market is projected to grow at an impressive CAGR of 16.3% from 2025 to 2032, reaching USD 5.3 billion by 2032, according to the latest industry insights.

This robust growth aligns with the Kingdom’s Vision 2030 initiative, which aims to accelerate digital transformation and reduce economic dependence on oil. With USD 18 billion in government funding to establish 1,300 MW of data capacity by 2030, Saudi Arabia is positioning itself as the regional hub for digital infrastructure and innovation.

Driving Forces of Growth

Key enablers of this expansion include reduced power tariffs for cloud providers, increasing adoption of digital technologies in banking, healthcare, and government services, and surging investments in AI, cloud ecosystems, and hyperscale data centers.

Flagship projects like NEOM and LEAP Riyadh are driving the demand for cutting-edge data infrastructure to power smart city initiatives and advanced information systems. Global technology leaders, including Google, AWS, and Nvidia, are expanding their presence to support Saudi Arabia’s digital ambitions.

Sustainability and Energy Efficiency at the Core

Saudi Arabia’s commitment to sustainability is redefining the data center landscape. Under the National Renewable Energy Program, clean and affordable energy — priced as low as USD 0.069 per kWh — enables companies to develop energy-efficient facilities.

More than 55 service providers, approved by the Saudi Energy Efficiency Center, are offering eco-friendly solutions integrating AI, IoT, and big data analytics to enhance performance. Innovative cooling technologies such as direct-to-chip, immersion, and hybrid cooling systems are being deployed to optimize energy consumption.

The upcoming NEOM Oxagon data center, powered by 100% renewable energy and supported by an advanced battery energy storage system, exemplifies this green transformation.

5G and IoT Accelerating Market Demand

Saudi Arabia’s rapid 5G rollout and IoT adoption are generating massive data volumes, fueling the need for scalable and secure storage solutions. With over 13,000 5G towers in Makkah alone and 70% population coverage, the Kingdom’s high-speed network is paving the way for advanced digital services in banking, healthcare, transport, and manufacturing.

At LEAP 2025 in Riyadh, Equinox announced a USD 1 billion investment in data center development, while Nvidia partnered with the government to deliver 500 MW of AI capacity leveraging 18,000 Grace Blackwell AI chips.

Market Segmentation Highlights

  • Colocation data centers dominate with a 30% market share, providing affordable, flexible hosting solutions.
  • Cloud and hyperscale centers are the fastest-growing segment, with a 17% CAGR, driven by cloud adoption and AI advancements.
  • IT infrastructure remains the backbone of the sector, accounting for 45% of market share, while mechanical infrastructure (notably cooling systems) shows the fastest growth at 17.5% CAGR.
  • By end-user, IT & Telecom leads with 35% share, while BFSI (Banking, Financial Services & Insurance) emerges as the fastest-growing sector at 17.8% CAGR.

Regional and Competitive Outlook

The Northern & Central region, led by Riyadh, holds the largest share (45%), supported by government initiatives and tech-driven industries. The Eastern region is set to witness the highest CAGR (18%), leveraging its proximity to international subsea cable routes and renewable energy investments.

The Saudi market remains highly competitive, with key players including stc Group, Salam, Sahara Net, Ezditek, NourNet, and Elm Company. These firms are investing heavily in next-generation infrastructure to support cloud, AI, and hyperscale operations.

Recent Strategic Developments

  • AWS & HUMAIN (May 2025): Announced USD 5 billion investment in an AI Zone in Saudi Arabia.
  • Alfanar Global Development (March 2025): Plans USD 1.4 billion data center projects.
  • stc Group & Ericsson (February 2025): Partner to co-develop advanced telecom and data center technologies.
  • DataVolt (February 2025): Leased 55,000 sqm in Riyadh for a new data center project.
  • Ezditek & G-Core Labs (November 2024): Formed an AI factory joint venture in the Kingdom.
  • stc, Korean Telecom & Hyundai E&C (April 2024): Signed MoU to develop smart city-focused data facilities.

Empowering the Kingdom’s Digital Future

Saudi Arabia’s data center expansion represents more than infrastructure — it is a cornerstone of national digital transformation. With strategic partnerships, sustainable energy integration, and massive capital inflows, the Kingdom is poised to become the Middle East’s data powerhouse and a global leader in digital innovation and cloud infrastructure.

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