NEOM
Saudi Arabia's futuristic Neom project has signed a deal to develop a multibillion-dollar artificial intelligence data center, per a Saudi Press Agency report.
Under the agreement with DataVolt, a Saudi-based international developer and operator of data centers, the first phase will receive an investment of $5 billion. The 1.5-gigawatt factory is expected to be online by 2028 and will be built in Neom's Oxagon industrial hub.
The Neom megacity, launched in 2017 by Crown Prince Mohammed bin Salman, is a key step in achieving Vision 2030, which aims to diversify the country's economy away from fossil fuels and transform it into a luxury tourism destination and innovation hub.
Investing in the data center comes as Saudi Arabia and the United Arab Emirates compete to become the Gulf's AI superpower, with both boosting investments in data centers. Last week, the UAE and France said they would commit between $31 billion and $52 billion to build Europe's largest AI data center.
Estimates for Neom's overall cost have reached as high as $1.5 trillion, while official communications put the cost closer to $500 billion.
Its high-tech centerpiece, the Line, is expected to accommodate 9 million people — and even more robots. There are plans to build a year-round ski resort with artificial snow and a number of theme parks.
The project has come under international scrutiny for alleged human rights abuses against local tribespeople. In 2023, the United Nations said it had concerns about the possible executions of members of the Howeitat tribe, whose people live in the area in which Neom is being built.
Neom did not immediately respond to Business Insider's request for comment.
Neom
Saudi Arabia's finance minister has described the kingdom's ambitious Neom project as a "very long-term program" and returns should not be expected in the coming years.
"Neom is a 50-plus-year plan. If anyone is thinking Neom in its grand size is going to be built and operated and making money in five years, that's foolish. We are not foolish. We are wise people," Mohammed Al Aljaadan said on Tuesday in comments reported by Reuters.
"Some projects within Neom will make returns in the short to medium term, but this is a very long-term program."
Neom, a futuristic development in Saudi's north, has become the centerpiece of its Vision 2030 plans to transform the oil-dependent economy. Some aspects of Neom, such as The Line, have been scaled back this year amid lower oil revenues and other issues.
Earlier this month the CEO of Neom abruptly stepped down after six years in the role. No explanation was given for this departure.
Saudi Arabia forecast a $26.8 billion deficit for 2025, or about 2.3% of GDP, in its Budget statement on Tuesday.
Aljaadan said in a press release that the Kingdom had maintained its strong financial position and that its development projects and plans had not been significantly affected.
Total expenditure in 2025 is forecast to be 1.285 trillion riyals ($342 billion), while total revenue is expected to be 1.184 trillion riyals ($315 billion).
Saudi Arabia's strategy for economic transformation has captured global attention but relies on hundreds of billions of dollars in investment in areas such as tourism, entertainment, and infrastructure.
The Saudi economy has contracted in recent years as the changes take place and global oil prices have declined.
Neom
In 2022, Saudi Arabia was the fastest-growing G20 economy, according to the IMF. Its GDP contracted in 2023.
The Saudi government has forecast 0.8% growth this year, and a sharp acceleration in 2025 as non-oil activities take off.
