The GCC sovereign wealth funds (SWF) wielded bns of USD in 2025 to secure everything from AI capabilities to energy resilience. As Julie Kassab of Deloitte points out, their strategic pivot westward is a quest for “regulatory certainty” and market depth, a move complemented by a shrewd focus on Asia.

It’s not all smooth sailing: Geopolitical headwinds — notably the US’ trade policy shifts and Middle East tensions — have forced a rethink, as Oxford Economics’ Azad Zangana notes, pushing SWFs to swap short-term profit for long-term supply chain security and competitive edge.

DATA POINT- The Public Investment Fund (PIF) led global sovereign investment in 2025 with USD 36.2 bn — 80% of which went to its acquisition of EA Sports. The Saudi fund was the largest contributor to private equity in 2025, deploying USD 33.1 bn throughout the year. It also invested some USD 8.3 bn in digitalization, with only USD 300 mn of that amount going toward pure AI investments.

Where did the money go?

The top sectors for capital: Saudi and UAE SWFs focused their investments on infrastructure, energy transition, digitalization, and advanced technologies, in addition to sectors connected to long-term economic resilience, Deloitte’s Sovereign Wealth Fund leader Julie Kassab tells EnterpriseAM. Attention was also given to partnerships and platforms that deliver scale, operational depth, and enduring market access.

The pivot westward

GCC SWFs were attracted to the West for its “regulatory certainty, market maturity, and governance standards,” Kassab said. These markets offered the scale and stability needed for sectors like infrastructure, energy transition, technology, and advanced manufacturing while also supporting domestic targets through knowledge transfer, strategic partnerships, and access to global best practices.

“Domestic investment continues to be central, but in 2025 it has been complemented by a more deliberate global approach,” Kassab said. The GCC funds’ international investments are turning into a pathway to gaining capabilities, expertise, and scale that can support domestic targets.

Yes, but: The US — and the West more broadly — was also no straightforward investment last year. One of two major geopolitical risks GCC SWFs faced last year that reshaped their investment strategies was the US’ introduction of a new trade policy, which created economic and policy uncertainty, Oxford Economics’ Macroeconomist Azad Zangana tells EnterpriseAM.

The other major risk? Escalating tensions between Iran and Israel — alongside the US — also led to a reassessment of regional risk, pushing funds to pursue greater diversification.

These events caused GCC SWFs to focus on future gains rather than short-term profitability, Kassab tells us. Although diversification and returns remain central goals, attention has shifted toward building portfolios that boost supply chain security, resilient infrastructure, energy systems, and advanced technologies. Funds are now increasingly targeting sectors and markets that offer lasting stability and a competitive edge in the long term.

The major drivers of the geopolitical shift towards the West: AI and energy

The regional geopolitical shift is being driven by the global energy transition, the emergence of new energy producers from Latin America to the US, and the rise of AI, Foreign Policy has recently written.

The PIF focused on Western tech transfer and Asian partnerships in 2025. The fund is leading a USD 55 bn takeover of US gaming giant EA, with its AI arm Humain partnering with AMD, Cisco, Blackstone, and Elon Musk’s xAI to build data centers in the Kingdom. The PIF also expects its total commitments in Japan to reach USD 27 bn by 2030 while setting up a USD 1 bn fund to support the expansion of Hong Kong and Greater Bay Area firms into Saudi.

Still, Saudi and UAE SWFs looked beyond specific geographies in 2025, targeting markets that provide “depth, stability, and access to innovation,” Kassab said. Developed markets with solid regulatory foundations continue to anchor investment strategies, alongside carefully chosen investments in high-growth regions.

The challenges: unprofitable investments and execution risk

What’s the catch? The focus on strategic investments could present some challenges, including mistimed investment entries that can hurt short-term performance, as well as the cost incurred from capital being locked in long-term strategic initiatives, Zangana said. They can also bring execution risks and extended investment horizons, demanding greater focus on governance, risk management, and portfolio diversification, Kassab said.

GCC countries are anchoring their economic transformation on ambitious strategies, yet overinvestment in unprofitable sectors or unsuccessful reforms could slow progress, according to Foreign Policy.

What’s next?

GCC SWFs are expected to maintain a “balanced approach” in 2026, with domestic investments driving national priorities and targeted global investments focused on resilience, innovation, and long-term competitiveness, Kassab said. Portfolio flexibility and disciplined capital deployment are expected to stay at the core as funds adapt to a rapidly changing global environment.

International geopolitical noise is expected to subside, allowing funds to refocus on domestic priorities, Zangana said. Meanwhile, investments in domestic infrastructure, healthcare, technology (including AI), and energy transition are likely to feature prominently in the upcoming few years.

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