Gulf AI Investment is rising fast, but returns remain slow. New reports show firms struggle to turn Gulf AI spending into profits despite strong adoption across the GCC.
Companies across the Gulf are funnelling millions into artificial intelligence, yet clear financial returns remain limited, according to new industry findings. Despite strong executive enthusiasm, the commercial payoff from AI continues to lag behind the Gulf AI momentum.
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A recent report by McKinsey & Company shows that only 11 per cent of businesses in the region currently generate profits from their AI initiatives, a figure aligned with global trends. The research underscores a widening gap between boardroom ambition and measurable value, as many organisations struggle to convert pilots and proofs-of-concept into scalable results.
“We don’t quite see the impact yet, and for any CFO funding transformation, that’s a topic of utmost focus, and in some cases, concern,” said Associate Partner Karan Soni of McKinsey. He attributed the slow gains to limited management alignment, insufficient AI-ready talent, and a lack of frameworks for evaluating business impact. “A lot of companies don’t yet know how to assess the value that they’re generating from AI,” he added.
Complementary research from Boston Consulting Group, which surveyed 1,803 global C-suite executives from companies earning more than $100 million annually, found that nearly one-third plan to allocate over $25 million to AI projects this year. Within Gulf Cooperation Council (GCC) markets, about one in four companies expects to match this investment level.
Across sectors, the appetite for Gulf AI spending continues to rise. An October survey by Deloitte reported that 85 per cent of organisations increased AI budgets in the past year, with 91 per cent planning additional increases in 2025. However, financial returns have proven slower than typical technology investments: most respondents cited a payback period of two to four years, compared with the usual seven to 12 months. Only 6 per cent reported returns within a year, while top-performing projects saw just 13 per cent achieving payback within 12 months.
The rise of agentic AI systems capable of autonomous decision-making has captured the interest of early adopters. Yet returns remain modest: only 10 per cent of companies using these tools report significant ROI, and many expect to wait three to five years for meaningful financial gains.
Still, optimism persists. “I’m quite certain that with the types of conversations and the type of commitment I’m seeing from executives in the market, this 11 percent of people making a profit from AI will look different in the next two to three years,” Soni said.
Why Gulf AI Investment Matters to MENA
Gulf AI investment trends reveal a broader regional shift: while companies are accelerating spending, the slow pace of returns highlights structural gaps in skills, governance, and readiness across MENA. As Gulf markets often set the pace for digital transformation in the region, their experience provides early indicators of what other MENA economies may encounter — from ROI delays to talent shortages and the operational hurdles of scaling AI beyond pilot phases.
