Artificial intelligence has surged across the Gulf with unprecedented speed. From banking and retail to manufacturing and government services, AI pilots are popping up everywhere. Yet a major new report by McKinsey & Company reveals a hard truth: most Gulf companies are still stuck in ‘pilot purgatory’ — unable to convert AI enthusiasm into enterprise-wide transformation.
According to The State of AI in GCC Countries: In Pursuit of Scale and Value, nearly every organisation surveyed is experimenting with AI, but more than two-thirds have not moved beyond the pilot phase. In other words, adoption is high, but impact is low.
A Gulf-based executive summed up the challenge:
“People still equate AI only with chatbots or models like ChatGPT. Awareness of deeper AI capabilities is limited. That’s why adoption at scale remains low.”
Talent and Know-How: The GCC’s Biggest Constraints
Karan Soni, report co-author and senior leader at McKinsey’s QuantumBlack, says the roadblocks come down to two issues — talent and organisational readiness.
“Pilot purgatory is real,” he told The National. “Pilots are cheap and fast. But scaling them across a company requires massive change management, and that’s the hard part.”
McKinsey estimates that every $1 spent on AI tech requires $4–$5 in change management. This includes retraining employees, redesigning workflows, and embedding AI into day-to-day operations. For large organisations, this transformation can take one to four years.
Adoption Rising — But Real Value Still Elusive
The GCC is making progress:
- 84% of Gulf organisations now use AI in at least one business function
- Up from 62% in 2023
- Yet only 31% have scaled AI beyond pilots
- And only 11% see measurable financial returns
To prepare the report, McKinsey and the GCC Board Directors Institute surveyed 139 senior executives and board members from Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE.
Their conclusion:
AI activity is rising — but maturity, governance, and ROI are not keeping pace.
Nearly 90% of Gulf executives plan to increase AI spending next year, yet few have clear AI roadmaps, KPIs, or value-focused metrics. McKinsey labels the top-performing 11% as “value realisers.”
The report also notes the Gulf’s early move toward agentic AI — systems capable of autonomous decision-making — signalling a shift from simple generative AI tools to more advanced, action-oriented technologies.
Infrastructure, FDI & What the Gulf Is Betting On
Value from AI depends on strong digital foundations. And the Gulf is investing aggressively:
- FDI in data centres, minerals, energy systems, and advanced manufacturing now accounts for 75% of announced global FDI.
- Mega-deals exceeding $1bn have risen from 30% (2015–2019) to 47% since 2022.
Recent examples highlight the regional momentum:
- Microsoft will invest $15bn in the UAE by 2029.
- Saudi Arabia’s Humain and AWS announced a $5bn investment to expand AI capacity in the kingdom and the broader region.
AI, Security & Gulf–US Relations
Experts say the Gulf’s AI push is tightly linked to its security landscape.
Bilal Saab of Trends US notes that “oil has been replaced with AI” as the new strategic asset.
Security concerns that once centred on energy infrastructure now focus on data centres, digital ecosystems, and AI-powered systems.
Talal Al Kaissi of G42 explained that the UAE’s early adoption of major technologies — from military systems to peaceful nuclear energy — created the foundations that today’s AI ecosystem is built on.
“The mindset of diversification prepared the UAE for the AI moment,” he said. “It’s what gives the region its competitive advantage today.”
The Gulf stands at a pivotal moment. The ambition is strong, the investment is rising, and global partnerships are accelerating. But until organisations break out of pilot purgatory through stronger talent, governance, and change management — the region risks leaving massive value on the table.
AI in the GCC is not a tech upgrade.
It’s a multi-year transformation — one that can redefine economies, industries, and global competitiveness.
