Saudi tech sector revenues near 13 billion riyals as artificial intelligence and data centres drive growth and squeeze profit margins

Revenues for the software and IT services sector listed on the Saudi Exchange crossed 12.99 billion riyals during the first half of 2026, marking a 14.7% year-on-year increase compared to the same period last year, while combined net profit for the sector rose 4.73% to 2.14 billion riyals. These financial results reflect the domestic market transitioning from standard digital transformation to a spending cycle focused directly on computing infrastructure, data processing, and building hosting facilities for artificial intelligence technologies.

Financial statements from listed companies showed marked divergence in growth patterns. Solutions by stc led the sector with revenues of around 6.24 billion riyals, up 9%, generating net profits of 824 million riyals, a 2.1% increase driven by a 19.6% rise in its core ICT services. Elm ranked second as its revenues jumped 21.1% to 4.99 billion riyals, with net profits exceeding 1.17 billion riyals, up 7.7%, supported by a 22.31% expansion in its digital business, alongside its full acquisition of business solutions firm Thiqa for approximately 3.4 billion riyals under a strategy targeting a 20% contribution from acquisitions to its income over five years.

Restructuring technology demandThis shift was evident in the performance of mid-sized firms. Al Moammar Information Systems recorded a 28.2% jump in revenue to 910 million riyals, yet its net profit dropped 15.85% to 55.6 million riyals. This divergence reflects the demands of the current phase, which imposes heavy capital and operational requirements for building data centers and computing capacity, including the company securing a data center hosting contract for AI firm Humane that alone represents more than 30% of its annual revenue for 2025, with the project expanding to 250 megawatts.

This revenue expansion rests on three structural drivers: ongoing public and enterprise spending on infrastructure, cloud platforms, and cybersecurity; the broadening adoption of digital platforms and rising data consumption, which bolstered recurring revenue models in a tech market that reached approximately 199 billion riyals by the end of 2025; and the accelerating shift toward procuring compute capacity, hosting artificial intelligence, and equipping local large-scale data processing centers.

Operational discipline and liquidity managementThese represent the main challenge for the coming period. Although combined revenues in the second quarter of 2026 rose 15.98% to 6.77 billion riyals, aggregate net profits for the sector fell 4.77% in the same quarter to 1.058 billion riyals. This decline underscores that winning major infrastructure contracts requires tight control over project delivery costs, working capital, and financing expenses, as well as retaining technical talent to ensure substantial top-line gains convert into cash flow and sustainable profit margins.

This shift carries direct implications for technology leaders and enterprises across the Gulf and the wider Arab region, requiring a reassessment of contract terms and capital allocation. Spending is no longer limited to off-the-shelf software licenses; it now requires securing local compute and hosting capacity for artificial intelligence deployments before competition for available capacity tightens. For those leading an IT department or planning a digital buildout, the real test is no longer securing the budget alone, but controlling operating costs, managing connectivity to local data centers, and protecting profit margins against fluctuations in capital expenditure and financing rates.