According to Financial Times News, Saudi Arabia is leading a $900 million funding round in US video startup Luma AI through its AI-focused venture Humain, which is backed by the kingdom’s sovereign wealth fund. The deal values Luma at more than $4 billion and will be announced this week at the US-Saudi Investment Forum in Washington, led by Crown Prince Mohammed bin Salman. Saudi Arabia plans to spend about $50 billion on AI “in the short term” as part of its push to become an international leader in artificial intelligence. Luma, based in Burbank, California, creates generative video models that respond to prompts to create movies or simulate reality. The funding will accelerate Luma’s efforts to train large-scale “world models” that learn from videos and robotic data rather than just language. Existing investors including Andreessen Horowitz and new investors like AMD Ventures also participated in the round.
The $50 Billion Question
Here’s the thing – Saudi Arabia is making an absolutely massive bet on AI, and they’re not being subtle about it. $50 billion “in the short term” is an enormous commitment from a country that’s historically built its wealth on oil. But can they actually become a global AI leader just by writing big checks? The kingdom’s Public Investment Fund has nearly $1 trillion in assets, so the money is definitely there. The question is whether they can build the ecosystem, talent, and innovation culture to match the financial firepower.
Luma’s Big Bet on Video
Luma is chasing what they call “world models” – AI systems that learn from video and robotic data rather than just text. Their co-founder Amit Jain talks about needing “a quadrillion tokens of information” which is basically the collective digital memory of humanity. That’s ambitious stuff. But they’re up against Google DeepMind, Meta, and other well-funded startups in the race for spatial intelligence systems. The Saudi money gives them serious runway, but the technical challenges are enormous. Creating AI that understands the physical world through video is one of the hardest problems in AI right now.
The Geopolitical Angle
This isn’t just about technology – it’s deeply political. The announcement timing at the US-Saudi Investment Forum, coming right after Trump’s visit to Riyadh in May, shows how AI is becoming a new frontier in international relations. Saudi Arabia wants to diversify away from oil, and they see AI as their ticket. But there’s also the cultural alignment aspect – part of the deal includes building AI models trained on Arabic and regional data. That could give Saudi Arabia influence over how AI develops in the Middle East and Muslim world. It’s smart positioning, honestly.
Massive Money, Massive Risks
Look, throwing $900 million at a startup is one thing. Actually building the computational infrastructure and talent to compete with Silicon Valley is another. Humain is building Project Halo, one of the world’s largest data center clusters, and they’re in talks with Nvidia for chips. But building data centers in the desert presents its own challenges – cooling, power, and attracting global AI talent to work there. Plus, Saudi Arabia has recalibrated spending as lower oil prices pressure their budget. Will they sustain this level of investment if oil prices drop further? The ambition is clear, but the execution risks are just as massive as the funding round.
