Saudi Arabia pulled ahead of the UAE in total startup funding last year, raising more than twice as much venture capital as its Gulf neighbour. But when it comes to artificial intelligence, the UAE is still leading the pack.
Fresh data from Magnitt reveals that AI-native and AI-enabled startups in the Middle East and North Africa raised a record $858 million in 2025—making up 22% of all VC funding in the region. Of that, UAE-based startups captured a commanding 60% share of AI investment, while Saudi startups took 29%.
This split highlights the different strategies at play. Industry experts say Saudi Arabia is focused on building out the core infrastructure for AI, while the UAE has moved faster to adopt and commercialize AI technologies. The kingdom is set to bring 2.2 gigawatts of AI compute capacity online in the coming years, far outpacing the UAE’s projected 500 megawatts. But the Emirates already enjoys the benefits of an early start, with broad access to generative AI tools and a culture of rapid adoption.
Microsoft data shows 64% of the UAE’s working-age population had used generative AI products by the end of 2025, compared to just 26% in Saudi Arabia. That widespread use, say investors, gives UAE entrepreneurs an edge when it comes to testing, validating, and scaling new AI ventures.
“Entrepreneurs can validate and scale AI startups within the UAE easier and quicker than in Saudi Arabia,” explains Sam Marchant, founder of Dubai-based VC firm Forward Pursuit.
However, the landscape is shifting. Saudi Arabia’s AI deal count jumped 79% year-on-year, while the UAE saw a 4% decline, suggesting that investment in the Emirates is becoming concentrated in fewer, bigger rounds. Analysts also warn that the UAE’s heavy focus on AI—nearly a quarter of its startup ecosystem is tied to the sector—could leave it more exposed if global AI valuations take a hit.
For now, the UAE is the region’s AI leader in both funding and adoption, while Saudi Arabia dominates the broader startup scene. Both are charting their own innovation courses, but their trajectories may soon overlap as regional ambitions grow.
