‘AI Sovereignty’ in the Gulf shifts from a compliance worry to building local applications and products

A recent study by Accenture, whose findings were presented alongside the LEAP tech conference in Riyadh, revealed that infrastructure and AI investments in the region have reached a critical crossroads. Although more than $15 billion in technology investments and partnerships were announced at the conference, Gulf markets are now being asked to move quickly from building computing capacity and data centers to developing commercial products and end-user applications.

The study, titled “Sovereign AI Engineering in the Middle East” and involving 185 leaders from Saudi Arabia, the United Arab Emirates and Qatar as part of a broader global survey, showed a clear paradox in system maturity; 60 percent of executives described their countries’ approach as “highly sovereign,” while firms have already moved 57 percent of their data and workloads to locally sovereign cloud environments. In contrast, 62 percent of respondents acknowledged that domestic sovereign offerings and solutions still lag behind the capabilities of major global cloud service providers.

The primary driver behind the push for digital sovereignty remained limited to regulatory compliance for 62 percent of regional firms, while the share of those who linked the initiative to financial returns or cultural alignment did not exceed 7 percent.Issues of AI sovereignty have also risen to the attention of boards or CEOs in only 10 percent of entities, which explains why initiatives remain framed as regulatory compliance rather than as drivers of clear commercial value.

Abir Habbal, Accenture’s regional data and AI lead and a contributor to the report, explained that the first phase focused on establishing foundations and computing capacity, while the next real growth opportunity lies in the “application layer.” Habbal believes the added value and competitive differentiators for the region’s countries reside in developing industry-specific solutions for sectors such as energy, logistics, health and others, leveraging cultural, linguistic and legal contexts to export the software internationally, while building intellectual property with local talent and proprietary code.

The shift is not intended to eliminate dependence on international partners; global collaborations remain essential for advanced chip layers and computing capabilities that are currently concentrated in the United States and China. The actual strategic aim, as Habbal clarifies, is to ensure that no external party can “turn off AI in the region,” a path pursued by major national entities such as Saudi Arabia’s HuwaMeen, part of the Public Investment Fund, and Abu Dhabi’s G42 group, backed by Mubadala.

Shifting from purchasing infrastructure to innovating applications requires Gulf and regional technology and corporate leaders to redirect budgets away from merely hosting generic models.Companies no longer need to replicate foundational capacity building; instead, they must focus their resources and engineering teams on digitizing the operational logic of their sectors, turning sovereign compliance from a mandatory operating cost into software assets and scalable, competitive commercial solutions.