Scale AI, a San Francisco-based artificial intelligence startup backed by Amazon, plans to establish an office in Riyadh, Saudi Arabia, by the end of the year.

The company also intends to open another office in the United Arab Emirates, although the timeline for this location has not been disclosed.

The move supports Gulf nations’ push to attract tech firms and grow local AI hubs amid broader economic diversification.

Founded in 2016, Scale AI helps companies like OpenAI and Microsoft by cleaning and labeling data for AI training.

It has recently expanded in the region through deals with Qatar and Abu Dhabi’s G42 to support public sector AI projects.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Gulf states are accelerating AI investments as a strategic economic diversification tool

Scale AI’s expansion into Saudi Arabia and UAE reflects a broader strategic shift happening across the Gulf region as countries pursue economic diversification.

The Middle East’s AI market is projected to contribute $320 billion to the regional economy by 2030, with Saudi Arabia alone expected to gain $135.2 billion (12.4% of its GDP) and the UAE seeing AI contribute nearly 14% of its GDP 1.

This aligns with urgent economic needs, as GCC countries are still heavily dependent on oil and gas, which account for over 40% of GDP in most Gulf nations while facing budget deficits averaging 9.2% in 2020 2.

The region is deploying its substantial financial resources toward this transformation, with sovereign wealth funds tapping into $2 trillion in assets to support diversification efforts beyond traditional energy sectors 2.

Scale AI’s entry follows a pattern of rising tech investments in the region, where AI spending grew 43% to reach $290 million in 2019, with projections of 22% CAGR through 2022 3.

2️⃣ The Middle East is emerging as a third global hub for AI development beyond US and China

Scale AI’s global managing director’s statement that the Middle East is “the fastest growing region for AI adoption” outside the US and China is supported by concrete investment patterns and strategic initiatives.

The UAE and Saudi Arabia now account for the majority of tech startup funding in the MENA region, capturing 44.3% and 33.4% respectively of the total $2 billion raised across 542 investment deals in 2024 4.