Saudi Arabia risks AI glut as Trump approves Nvidia sale

• PIF unit in $700m deal for US chips
• Oversupply possible in short term
• But ‘clear signal of long-term ambition’

Saudi Arabia’s plan to build one of the world’s largest artificial intelligence infrastructures may lead to oversupply in the short term, creating spare capacity for export to other emerging markets, AI experts have said.

Although domestic demand is growing, Riyadh’s rollout of compute – computing power for AI – is outpacing current uses.

Capacity is expected to accelerate as President Donald Trump looks at easing restrictions on exports of advanced chips to Gulf nations. Those controls were designed to thwart onward sales to China. 

However, on the first day of Trump’s Middle East tour this week, the US authorities cleared the sale of 18,000 of Nvidia’s latest GB300 Grace Blackwell chips to an AI company owned by Saudi Arabia’s Public Investment Fund.

The newly formed company, called Humain and chaired by Saudi Crown Prince Mohammed bin Salman, will pay more than $700 million for the chips.

“With 18,000 chips, it would be one of the region’s biggest supercomputers,” UAE-based technology consultant Carrington Malin told AGBI.

“When you start with two jumbo jets full of racks for high-performance computing systems, you’re going to have excess capacity.”

The capacity is likely to come online “pretty quickly”, raising the risk of oversupply in the short term, Malin said.

The chips, priced at about $40,000 each, will be deployed at so-called AI factories with a projected capacity of 500 megawatts. These factories will use “several hundred thousand” of Nvidia’s most advanced processors over the next five years. 

Humain unveiled plans on Monday to build 1.9 gigawatts of data centre capacity by 2030 – data centre capacity is often measured in the amount of electricity used because AI consumes so much power.

Mahesh Jaishankar, senior adviser at consultancy Arthur D Little, said the compute based on the number of chips being deployed “could be far more than the demand of the country”. 

“So the expectation is that they are going to have to export [compute] in some form,” he said.

Saudi Arabia is planning to treat international companies’ data centres like “digital embassies“. 

It says foreign businesses will be able to process data inside the kingdom using relatively cheap local energy and protected infrastructure, while maintaining sovereignty over their data.

The AI push comes as Saudi Arabia seeks to diversify its economy, although its Vision 2030 transformation strategy is coming under pressure because of lower-than-expected oil revenues and rising fiscal deficits.

Tareq Amin, Humain’s CEO and the former head of Aramco’s Groq data centre, is positioning Saudi compute as cost-competitive.

While Malin is predicting “a settling-down period, where it’s going to take time to fill the capacity”, Karthik Raman, chief revenue and growth officer at Dubai tech consultancy RevDau, believes “oversupply is the last problem Saudi will have” in the long term.

Raman points to the growing AI demand from the Neom giga-project and potential “smart city” innovations such as police robots, AI-powered janitors, intelligent traffic lights and autonomous vehicles. 

Tesla CEO Elon Musk, who accompanied Trump to Riyadh, told the Saudi-US Investment Forum on Tuesday that his company’s robotaxis would be introduced to the kingdom, although he did not give a date.

Murat Atici, CEO of Turkish enterprise software company Bimser, says the massive AI infrastructure planned for Saudi Arabia may allow it to lead in areas such as digital twin technologies, where full-scale simulations of cities are created for urban planning, sustainability and traffic optimisation.

There is also enormous potential in AI-driven diagnostics and drug discovery, power grid maintenance, environmental monitoring, AI-powered surveillance and personalised citizen services, Atici said.

“This scale of compute could represent 2 to 3 percent of the world’s total AI capacity, putting the kingdom at the forefront of the AI race,” Atici said.

“While it exceeds their current domestic demand, it’s a clear signal of long-term ambition.”

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