Why Saudi Arabia Is Suddenly Buying Billions in U.S. Tech Stocks

Situated in the financial center of Riyadh, the offices of Saudi Arabia’s sovereign wealth fund are encircled by glass buildings that appear to glitter in the desert sun. Inside, spreadsheets light on screens late into the night as billion-dollar deals are discussed in private. Observing this from a distance, it seems like a small but significant change has occurred. Saudi Arabia is now investing in more than simply the United States. It is relocating itself into the American technological apparatus.

According to recent filings, the Public Investment Fund made adjustments to its portfolio of U.S. stocks that resembled deliberate choreography rather than ordinary trading. It offered investments in well-known behemoths like Shopify, PayPal, and Meta. whole jobs. Lost. However, its total exposure to U.S. stocks is still very high, at over $24 billion. The paradox of aggressively selling while maintaining a high level of investment begs the silent but inevitable question: what is the kingdom getting ready for?

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Perhaps the goal is to choose American technology more carefully rather than to completely give it up. In many respects, the businesses it sold were the beneficiaries of the internet economy of yesterday, including e-commerce platforms, digital payments, and social media. Yes, it is valuable. However, the frontier might no longer exist. Chipmakers, infrastructure firms driving the next wave, and artificial intelligence appear to be attracting more and more investors. Although it isn’t stated clearly in the documents, it seems like Saudi money—patient and strategic—is moving in that way.

This change coincides with Saudi Arabia’s efforts to remake itself. The kingdom’s financial identity was defined for many years by its oil wealth. That is still important. However, discussions in conference rooms in Riyadh and Washington have begun to sound different, replete with terms like “data,” “compute,” and “automation.” Saudi authorities recently sealed agreements totaling hundreds of billions of dollars in sophisticated manufacturing, defense, and artificial intelligence at investment conferences. Crown Prince Mohammed bin Salman stood at those podiums and talked about technical cooperation and employment development, but the tone was different. urgency.

That urgency has a practical explanation. Oil feels less permanent than it used to, even though it is still profitable. The globe is moving toward digital economy, renewable energy sources, and electrification. Saudi Arabia is aware of this. It might even be afraid of it. Investing in American digital firms is about more than just making money. Purchasing proximity to the future—or at least to the businesses creating it—is the goal.

The tactic is not wholly novel. Long before ride-hailing became commonplace, Saudi Arabia made a significant wager on Uber. Before most people had even seen an electric vehicle on the road, it backed an electric vehicle startup by investing in Lucid Motors. Those were not haphazard investments. They were attempts to link Saudi capital to sectors of the economy that were changing daily life. It is easier to see the appeal when you are standing in Lucid’s huge factory, with its silent robotic arms and unfinished vehicles waiting beneath brilliant lights. The world is moving in this direction.

However, the recent sales indicate that Saudi Arabia is not slavishly devoted to its investments. For example, the departure from Meta follows years of turbulence and increased political surveillance of social media sites. Newer fintech companies are posing a threat to PayPal, which was long seen to be the foundation of digital payments. Shopify has had difficulty keeping up the momentum that it had during pandemic lockdowns. These businesses are being reassessed by investors worldwide. Saudi Arabia simply took it a step farther.

All of this is intertwined with politics. Saudi Arabia and the United States have traditionally had a complex, occasionally cordial, but occasionally tense, economic relationship. However, money has a way of reducing those sharp edges. Mutual reliance is produced via investment agreements valued at hundreds of billions. American invention is made available to Saudi Arabia. The US makes money. For the time being, both parties gain.

However, there’s a little unease about the time. Because of the euphoria surrounding artificial intelligence, U.S. tech stocks have been rising once more. It might be a great idea to join the rally. or late. Whether this is a well-timed move or a careful attempt to avoid missing out is yet unknown. Despite their size, sovereign wealth funds lack crystal balls.

The same subdued strain is present when strolling around financial areas in places like Riyadh, New York, and San Francisco. People are aware of significant technological advancements. They simply aren’t sure where it ends. That unpredictability is reflected in Saudi Arabia’s investment choices. selling a few businesses. retaining other people. Getting ready for something.

The difference between now and ten years ago is difficult to ignore. There were fewer inquiries and oil money went forth back then. It now moves purposefully, almost defensively, in an effort to find relevance in a world that is changing.

Saudi Arabia does more than just purchase stocks. Time is being bought.