Middle Eastern mergers and acquisitions (M&A) have demonstrated remarkable resilience and strategic focus, with deal values surging 260% to $53 billion in the first nine months of 2025 compared to the same period last year. This exceptional growth comes despite experiencing its lowest levels since the COVID shock earlier in the year, according to BCG’s annual Global M&A Report 2025 released today. The region’s performance is driven by a select group of experienced dealmakers making disciplined, strategic investments amid continued global market volatility.

Monthly data reveals that Middle East M&A activity over the past three years has consistently exceeded historical averages, recovering strongly from the pandemic dip. BCG’s M&A Sentiment Index, a forward-looking indicator of deal activity, shows increasingly positive sentiment across all sectors, with confidence reaching its highest levels in technology and energy. While Africa, the Middle East, and Central Asia recorded a 6% increase in aggregate deal value, the region continues working to surpass its 10-year average.

“The Middle East’s M&A landscape in 2025 reflects a sophisticated approach to capital deployment, where strategic diversification meets digital ambition,” said Samuele Bellani, Managing Director & Partner at BCG. “We’re witnessing experienced dealmakers making highly disciplined investments that simultaneously strengthen traditional energy capabilities while building new pillars of economic growth in technology and industrial services.”

M&A Energy Sector Consolidation Drives Regional M&A Leadership

Energy transactions remained the cornerstone of Middle Eastern M&A activity throughout 2025, as state-backed entities pursued aggressive domestic consolidation while simultaneously expanding their international footprint through strategic acquisitions. A landmark $13.4 billion acquisition reinforces the UAE’s ambitious international expansion strategy in the chemicals sector, while a $693 million purchase in power generation and utilities exemplified the ongoing consolidation within the sector. These strategic moves underscore sector resilience while supporting the region’s gradual but determined pivot toward renewable energy sources, positioning national champions for the global energy transition.

The industrial sector emerged as a central pillar of the Middle East’s economic diversification strategy, with governments and sovereign wealth funds systematically building capabilities beyond traditional hydrocarbon dependencies. A $925 million acquisition highlights the accelerating consolidation of critical supply chain infrastructure across the region. This transaction reflects a broader, long-term initiative to establish the Middle East as a premier hub for industrial and logistics services, fundamentally reducing dependency on energy revenues while enhancing the region’s global competitiveness across multiple sectors.

Digital Transformation Fuels Technology Sector Emergence

Technology, media, and telecommunications gained unprecedented momentum in 2025, establishing itself as an emerging pillar of regional deal activity and signaling a fundamental shift in investment priorities. A transformative $3.5 billion acquisition, representing one of the largest digital entertainment transactions globally, demonstrates the region’s serious ambitions to become a global leader in gaming and digital entertainment. A $855 million acquisition strategically expanded the Middle East’s telecommunications influence into European markets. These high-profile transactions clearly demonstrate that Middle Eastern acquirers are strategically deploying substantial capital to capture growth opportunities across digital platforms, connectivity infrastructure, and entertainment services, aligning perfectly with broader national digital transformation agendas.

“What we’re seeing is a fundamental transformation in how Middle Eastern investors approach M&A,” said Samuele Bellani, Managing Director & Partner at BCG. “The region’s sovereign wealth funds are not just engines of deal flow—they’re architects of a new economic paradigm that balances traditional energy strengths with cutting-edge technological capabilities and world-class industrial infrastructure.”

As 2025 enters its final months, the Middle East has distinguished itself as one of the world’s most active and strategically focused M&A markets. Sovereign wealth funds continue providing an exceptionally deep pool of liquidity capable of sustaining robust deal flow regardless of global economic cycles or market volatility. Government-led strategies persistently drive consolidation across industrial and technology sectors, creating unprecedented resilience against the region’s historical reliance on hydrocarbon revenues. The combination of steady foreign interest across TMT, financial services, and healthcare sectors demonstrates the region’s unique dual advantage of supporting sustainable growth while accelerating economic diversification initiatives.

The sustained momentum in Middle Eastern M&A activity reflects a mature understanding of global market dynamics, where strategic patience combines with decisive action to create lasting competitive advantages across multiple sectors and geographies.

With nearly 2.5 billion people projected to have some degree of hearing loss by 2050 as per World Health Organization, Starkey MEA is calling for faster adoption of AI-enabled hearing innovation that delivers practical, measurable improvement for patients in real-world environments.

AI is reshaping what hearing aids are expected to do. The category is moving beyond basic amplification toward systems that can interpret complex soundscapes, prioritise speech, and personalise output moment by moment—especially in noise, multi-speaker settings, and fast-changing environments. Starkey says this shift demands on-device intelligence that is fast, power-efficient, and clinically meaningful, rather than “AI” that lives mainly in marketing language.

“Talking about AI is easy. Delivering AI that makes hearing clearer when life is noisy, and that does it reliably all day, is the real standard,” said Giscard Bechara, Regional Director, Middle East & Africa, Starkey MEA. “With the scale of hearing loss projected globally, innovation can’t crawl. In MEA, our focus is to bring on-device intelligence that adapts in real time to the person and the environment—because that is what patients actually feel. We will also be introducing a new AI-driven hearing solution in the region soon, and we look forward to sharing what this next step means for hearing professionals and the communities they serve across the Middle East and Africa.”

As part of a wider drive to promote hearing health awareness across the Middle East, Starkey MEA has highlighted how AI-led hearing technology can be engineered to mirror the way the brain processes sound. In regional communications around its latest platform direction, Starkey has stated that its AI-based processing can make up to 80 million personalised adjustments per hour, with the intent of helping wearers stay comfortable and connected across different listening situations.

Starkey’s progress in AI processing has been built over multiple technology generations. In earlier platform disclosures, the company described its Neuro Processor architecture as delivering six times more transistors, ten times more memory, and up to four times faster processing than the prior generation—advances designed to support higher-speed analysis and optimisation without compromising everyday usability.

Starkey had introduced Edge AI featuring the G2 Neuro Processor, which the company describes as incorporating a Neural Processing Unit (NPU) with deep neural network (DNN) processing capabilities, and as being engineered for strong performance while maintaining “industry-leading battery life.” Starkey also claims the G2 includes the “industry’s only NPU fully integrated into the chip.”

In parallel, Starkey continues to frame hearing technology as a platform that can support aspects of health and safety, alongside hearing performance. The company has announced hearing aids with built-in balance assessment and has linked this to fall-risk screening frameworks, including referencing the CDC’s STEADI initiative, as well as ongoing work validating balance assessment approaches with external research partners.

Starkey MEA continues to work with hearing care professionals across the region to support patient awareness, strengthen hearing health conversations, and accelerate access to next-generation AI-enabled hearing solutions as they become available in-market.

By Farid Yousefi, Founder & CEO, Finder Group Ai

Artificial intelligence in the Gulf Cooperation Council (GCC) is entering a decisive new chapter. What began as experimentation, ie, isolated pilots, proof-of-concept chatbots, and innovation lab demos, is rapidly evolving into something far more consequential. In 2026, AI will no longer sit at the periphery of digital transformation strategies. Instead, it will operate as a foundational layer of economic, industrial, and civic infrastructure, embedded into how energy systems run, how governments serve citizens, and how capital flows through the region.

This shift reflects a broader reality: the GCC is no longer merely adopting global AI trends, but actively shaping its own AI paradigm, one that is grounded in sovereign control of data and compute, tuned to Arabic language and local context, and aligned with national visions that prioritize scale, speed, and long-term resilience. The region’s ambition is not incremental improvement, it is to redefine how intelligence itself is designed, governed, and deployed at national scale.

The Maturation of Generative and Agentic AI

By 2026, the most significant leap in AI capability across the GCC will come from the maturation of generative AI and “agentic” AI systems. These technologies move beyond passive analytics or conversational interfaces. Agentic AI can reason, plan, and take actions across complex workflows, effectively acting as a digital operator rather than a static tool.

Crucially for the region, large language models fine-tuned for Arabic dialects and Gulf-specific context are rapidly improving. This has profound implications. Customer-facing AI systems are becoming genuinely fluent, capable of understanding nuance across Modern Standard Arabic, Gulf dialects, and bilingual Arabic-English interactions. Banks can now deploy AI-driven fraud detection and customer support in Arabic without sacrificing accuracy or trust. Governments can offer multilingual virtual assistants that guide citizens through services with clarity and cultural sensitivity.

Beyond language, real-time predictive analytics is reaching operational maturity. In energy and utilities, AI models are being trained to detect early warning signs of equipment failure on oil rigs, pipelines, and power grids. The economic impact is significant: preventing a single unplanned outage can save millions of dollars while improving safety and environmental outcomes.

In logistics and smart cities, multimodal AI, systems that simultaneously process images, sensor data, and text, is transforming operations. Ports are using AI to automate customs paperwork and optimize cargo routing. Cities like Dubai and Riyadh are deploying AI to dynamically manage traffic congestion, monitor infrastructure health, and improve public safety. These capabilities signal a clear transition: AI is no longer an experimental back-office function, but front-line infrastructure, intelligence delivered as a utility.

Redesigning Government and National Infrastructure Around AI

This technological maturation is reshaping how GCC governments think about digital services and national-scale infrastructure. Traditional e-government portals, static, form-based, and siloed, are giving way to AI-powered concierge models. Instead of navigating multiple platforms, citizens increasingly interact with a single intelligent agent.

Imagine a system that can visually review submitted documents, understand a request in natural language, and execute transactions across multiple departments in one seamless interaction. This is not a distant vision. Across the GCC, ministries are already using generative AI to automate administrative tasks, summarize regulations, and simulate policy outcomes. These early deployments foreshadow a future where agent-based systems anticipate needs and act proactively.

Mega-projects and smart city initiatives are embedding AI from inception rather than retrofitting it later. With dense networks of IoT sensors feeding real-time data, cities such as NEOM, Riyadh, and Dubai are building AI “control layers” that continuously monitor traffic, energy consumption, water usage, and security. Agent-based systems can then coordinate responses, rerouting vehicles, balancing power loads, or flagging anomalies, without waiting for human intervention.

The result is self-optimizing infrastructure. Humans remain responsible for strategy, ethics, and oversight, while AI executes decisions at machine speed. This represents a fundamental shift in governance and urban management: designing for intelligence at scale rather than manual supervision.

Sovereign Compute: The Backbone of GCC AI Ambitions

None of this transformation is possible without a parallel revolution in AI infrastructure. The GCC’s aspiration to become a global AI hub hinges on sovereign compute capacity – control over the data centers, chips, and energy that power advanced AI models.

Over the past two years alone, sovereign wealth funds across the region have mobilized more than $100 billion toward AI infrastructure. This scale of investment is unprecedented, outpacing even Europe. Landmark initiatives such as Abu Dhabi’s Stargate project, a multi-gigawatt data center campus designed to host and train large AI models on local data, and Saudi Arabia’s plans for up to 6 gigawatts of AI data centers under its HUMAIN initiative exemplify this ambition.

The region enjoys a structural advantage in this race: energy. Power costs in the Gulf are less than half those in many European markets, providing a natural edge in the energy-intensive process of training large models. At the same time, operators are innovating to address environmental and climatic challenges. Advanced cooling technologies, including liquid immersion cooling, are being deployed to operate efficiently in summer temperatures exceeding 45°C. Renewable energy integration is also increasing, aligning AI growth with sustainability goals.

Equally important is sovereign control over hardware. GCC nations are investing in local chip design programs and forging strategic partnerships to secure access to cutting-edge AI processors. In an era of global supply-chain uncertainty, this control over compute is becoming as strategically important as control over oil reserves once was. The region is effectively converting its natural advantages of capital and energy into a durable compute advantage for the AI age.

Where ROI Is Materializing First

From an investment standpoint, the strongest returns in the GCC are emerging where AI delivers direct, measurable impact. Predictive maintenance in energy and utilities is a prime example. AI systems that prevent equipment failures or optimize drilling operations offer immediate cost savings and operational resilience. Unsurprisingly, pilots in oil and gas—such as AI models analyzing drilling plans—are rapidly scaling into production environments.

In financial services, AI-driven fraud detection, risk scoring, and KYC automation are moving from experimentation to enterprise-wide deployment. Banks across the region have demonstrated that these systems reduce losses, improve compliance, and significantly speed up customer onboarding. Customer service automation is also reaching maturity. Telecom operators, airlines, and government agencies that once piloted Arabic-language chatbots are now preparing to replace tier-one support entirely with AI agents, improving availability while lowering costs.

Logistics represents another high-ROI frontier. Gulf ports and free zones are scaling AI solutions that automate documentation, optimize cargo flows, and reduce bottlenecks. Successful trials have shown faster throughput and improved competitiveness—critical advantages for economies positioning themselves as global trade hubs.

The common thread is pragmatism. Investors and enterprises are increasingly prioritizing AI that solves real problems and delivers returns per dollar invested. The era of AI experimentation without clear outcomes is giving way to disciplined scaling of proven use cases.

Regulation as an Accelerator, Not a Constraint

As AI adoption accelerates, governance has become a central pillar of the GCC’s strategy. National AI frameworks in the UAE, Saudi Arabia, and Qatar are establishing trust-first guardrails focused on transparency, accountability, and human oversight. These policies are not designed to slow innovation, but to ensure it scales safely.

Saudi Arabia’s guidelines, for example, mandate human oversight for public-sector AI and require transparency measures such as watermarking AI-generated content. Qatar’s central bank has introduced governance rules requiring audits and human review for high-stakes algorithms. These frameworks inevitably influence data flows, encouraging sensitive information to remain within national borders.

While this localization may initially limit free cross-border data movement, it is simultaneously fueling massive investment in regional cloud and data center infrastructure. Over time, regulatory alignment across the GCC, particularly around shared principles of fairness, accountability, and transparency, will enable AI solutions certified in one country to scale regionally. Clear rules reduce uncertainty, giving enterprises and investors confidence to deploy AI at scale.

The Hidden Risks of Autonomous AI

Despite the momentum, risks remain, and some are underestimated. One of the most significant is overconfidence in AI accuracy. Even advanced models can hallucinate or fail, particularly when dealing with local dialects or sparse data. In high-stakes sectors such as security, healthcare, or law enforcement, such errors can have serious consequences. Human oversight is therefore not optional, regardless of how autonomous a system becomes.

Operational fragility is another concern. Many organizations overlook infrastructure dependencies, such as reliance on imported GPUs or insufficient cooling and backup power for data centers. In the Gulf’s climate, these vulnerabilities can quickly become systemic risks. Cybersecurity also takes on new dimensions as AI systems gain autonomy, expanding the attack surface for malicious actors. A compromised AI traffic system or a convincing deepfake could undermine public trust overnight.

Finally, reputational and regulatory backlash remains a risk if AI is misused or deployed without adequate safeguards. A single incident involving biased decision-making or a privacy breach could slow adoption across entire sectors. Rigorous testing, transparency, and fail-safes, the unglamorous aspects of AI, are essential for sustainable progress.

Who Will Lead the GCC AI Race?

By 2026, leadership in the GCC AI landscape will be shaped by a combination of talent, data, sovereign strategy, and investment appetite. The UAE and Saudi Arabia are poised to lead, each leveraging distinct strengths. The UAE’s early-mover advantage, world-class institutions such as MBZUAI, and deep integration of AI into daily life have positioned it as a global reference point for adoption. Saudi Arabia, meanwhile, brings unmatched scale, capital, and data assets particularly in energy, making it the region’s AI infrastructure powerhouse.

Other GCC nations will lead in targeted ways. Qatar is emerging as a center for ethical AI and safe deployment, Bahrain as a pioneer in cloud-first government integration, and Oman as a steady builder of digital infrastructure and local talent pipelines. Across industries, government services will continue to drive adoption, while energy and finance lead commercially.

From Oil Wells to “Intel Wells”

Ultimately, the GCC’s AI journey is about more than technology, it’s about redefining economic value creation. The region is moving from oil wells to “intel wells,” treating data and insight as the new strategic resource. At Finder Group AI, our mission is to connect the region’s abundant capital with its brightest innovators responsibly, transparently, and at scale.

By 2026, the global conversation will shift from AI hype to AI habitat. The Gulf will not just be adopting AI, but exporting a new standard, one that balances cutting-edge innovation with trust, governance, and purpose. The rise of the GCC as an AI hub will create opportunities far beyond its borders, shaping the next phase of the global AI economy on the region’s own terms.

-Ends-

About the Author:

Farid Yousefi is a serial entrepreneur and innovator leading the development of Finder Group Ai, an AI-powered venture builder ecosystem based in Dubai. With a strong background in strategy, business development, and technology adoption, his focus is on helping ideas transform into scalable businesses through AI-driven solutions.

His work spans across building and mentoring startups, forging partnerships, and guiding ventures from ideation to growth. He is passionate about creating impact through technology, developing sustainable ecosystems, and supporting founders on their journey through in-depth technical and industry knowledge and expertise and access to a global network of venture capitalists and angel investors to attract investment, and through partnerships at the highest level within government to aid integration and scale rapidly within local territories.