Assessing the Viability of U.S.-Saudi Economic Partnerships in a Post-Oil Era

The U.S.-Saudi economic partnership, now valued at $270 billion, represents a bold reimagining of bilateral relations in a world increasingly defined by technological competition and energy transition. At the heart of this partnership lies a dual focus on artificial intelligence (AI) and defense, sectors that promise both strategic alignment and financial returns. Yet, as with any high-stakes geopolitical bet, the long-term viability of these deals hinges on navigating complex risks and opportunities.

The AI Gambit: Humain and the Semiconductor Shift

Saudi Arabia's ambition to become the world's third-largest AI power is no longer a distant aspiration. The kingdom's state-backed AI firm, Humain, is central to this vision, with recent developments signaling a pivotal shift in U.S. export policies. According to a Bloomberg report, the U.S. is poised to approve the sale of tens of thousands of advanced AI chips to Humain, a move that could accelerate Saudi Arabia's data infrastructure ambitions. This aligns with Crown Prince Mohammed bin Salman's stated goal of investing $50 billion in semiconductors in the short term according to Bloomberg.

The partnership extends beyond chip sales. Saudi Arabia is set to announce agreements with U.S. firms like Amazon, AMD, xAI, and GlobalAI to build multi-gigawatt data centers, a critical enabler for AI training and deployment. These deals, part of the broader $270 billion package, reflect a mutual recognition of AI's centrality to future economic and military power. For U.S. firms, the access to Saudi capital and market scale is enticing, while Riyadh gains technological know-how and a foothold in the global AI race.

However, the semiconductor component of the deal is not without controversy. U.S. policymakers have long worried that advanced chips exported to the Middle East could indirectly benefit China. To address this, Saudi Arabia has reportedly committed to excluding Huawei equipment from its infrastructure-a concession that eases some U.S. concerns but does not entirely eliminate the risk of technology leakage.

Defense Sales and Strategic Alliances

The F-35 fighter jet sales and broader defense contracts under the $270 billion partnership underscore a deepening military relationship. As stated by President Donald Trump, these deals are part of a "broader defense cooperation agreement" that includes formalizing discussions on a Saudi civil nuclear program. The administration's decision to designate Saudi Arabia as a major non-NATO ally-a status reserved for close partners-further highlights the strategic calculus at play.

From an investment perspective, defense sales offer a dual benefit: they generate revenue for U.S. defense contractors while reinforcing Saudi Arabia's role as a counterweight to regional rivals. For firms like Lockheed Martin, which produces the F-35, these contracts represent a stable revenue stream in an otherwise volatile sector. Yet, the geopolitical risks remain acute. Any escalation in regional tensions or shifts in U.S. foreign policy could jeopardize these agreements, particularly if they are perceived as exacerbating conflicts in the Middle East.

Trump-MBS Dynamics and Geopolitical Risks

The partnership's viability is inextricably tied to the personal and political relationship between Donald Trump and Crown Prince Mohammed bin Salman. Trump's administration has prioritized economic and strategic ties with Saudi Arabia, framing the $270 billion deals as a win-win for both nations. However, this alignment is not guaranteed to endure. A shift in U.S. leadership, whether in 2024 or beyond, could recalibrate priorities, particularly if there is a change in how Washington views Saudi Arabia's human rights record or regional conduct.

Moreover, the partnership's success depends on Saudi Arabia's ability to deliver on its economic transformation. While the kingdom has made strides in Vision 2030, its reliance on oil revenues remains significant. If global energy markets shift more rapidly than anticipated-say, due to a green energy revolution or geopolitical disruptions-the financial commitments under the $270 billion package could strain Riyadh's fiscal capacity.

Conclusion: A Calculated Bet in a High-Stakes Game

The U.S.-Saudi economic partnership is a calculated bet on two pillars: AI as the next frontier of economic power and defense as a stabilizer in a volatile region. For investors, the opportunities are clear-access to Saudi capital, participation in cutting-edge AI infrastructure, and long-term defense contracts. Yet, the risks are equally pronounced, from geopolitical volatility to the ethical implications of technology transfer.

As the world moves beyond the oil era, the success of this partnership will depend on its ability to adapt to shifting tides. For now, the $270 billion deal represents a bold experiment in aligning economic ambition with strategic necessity-a test of whether two global powers can navigate their differences to build a shared future.