As expected, 2025 was the year of the data center, as a digital infrastructure push led the communications sector to topple renewables as the segment seeing the most greenfield FDI globally, according to FDI Intelligence. Total FDI inflows came in at USD 1.3 tn, the fifth-highest figure on record.

Data centers did the heavy lifting for the communications sector, bringing in a record USD 319.7 bn — jumping from USD 184 bn the year before — and accounting for nearly 50% of the 129 megaprojects of the year.

AI’s pull didn’t stop there — its infrastructure lifted FDI levels across other sectors. Investments in semiconductors came in at a record USD 138 bn last year.

The renewables sector was the second-largest FDI recipient, despite inflows falling 26% y-o-y to USD 193 bn. Green hydrogen, clean tech, and wind all saw commitment dips, while solar power remained a bright spot, bringing in USD 75 bn — albeit still less than the previous two years.

Elsewhere, real estate attracted a decade-high USD 102.8 bn, up from USD 96 bn the year before. Projects in aluminum and steel buoyed the metals sector’s USD 62 bn allocation, LNG boosted fossil fuels’ contribution of USD 54 bn, and chemicals made a comeback with USD 33 bn. Automotive manufacturing and electronic components both saw their inflows drop.

Our take: Investors are retreating from speculative, long-horizon green hydrogen projects as regulatory hurdles and uncertain revenue models stalled development — and as the focus shifts toward the physical infrastructure underpinning the global AI race. Investors are now prioritizing immediate AI computing capacity assets over future energy technologies.

This might not last long, though. Soaring data center demand is set to increase electricity consumption, turning these facilities into major bottlenecks for aging grids. The next wave of FDI is expected to give special attention to renewable projects designed exclusively to power AI campuses, rather than general grids. This strategy could push countries with abundant, low-cost power, such as the UAE and Saudi Arabia, to use their energy surplus to draw digital investments from grid-constrained Western markets.

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The TASI fell 1.3% on Thursday on turnover of SAR 5.5 bn. The index is up 6.7% YTD.

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