When one tech company reports profit growth and another announces a multimillion-riyal AI project, while real estate companies post substantial losses, it can look as though capital is moving from buildings to servers. But do these figures reflect a genuine economic shift, or do they raise new questions about company valuations and the possibility of an investment bubble?

On the morning of Sunday, November 1, 2026, companies listed on the Saudi market reported sharply contrasting figures.

Elm reported that its profit for the first nine months of the year had risen to SAR 1.95 billion, while Go Telecom announced that it had been awarded an AI infrastructure project worth approximately SAR 186 million.

By contrast, Jabal Omar Development posted a quarterly loss of more than SAR 261 million, while Emaar the Economic City reported losses of SAR 444 million for the first nine months.

These results may suggest that tech companies are making money while real estate companies are struggling. But reading the figures this way overlooks an important fact: companies do not earn profits in the same way, and an accounting loss does not necessarily mean a project has failed, just as high profits do not necessarily make a stock a good investment.

To understand the picture, we first need to learn the language of financial statements.

What do profits and losses mean?

Imagine someone opens a café and generates SAR 1 million in sales over three months.

That figure is called “revenue”—the money a business earns from selling products or providing services, before costs and expenses are deducted.

But the café had to buy coffee and milk, pay staff salaries and rent, cover electricity bills, and meet other expenses.

If total costs and expenses, after accounting for all relevant items, amount to SAR 900,000, net profit will be SAR 100,000.

If costs and expenses exceed revenue, reaching, for example, SAR 1.1 million, the result will be a loss of SAR 100,000.

This brings us to the first distinction we need to understand:

Revenue tells us the scale of a business, while net profit tells us what remains after costs, expenses, other income, and relevant accounting obligations are taken into account.

That is why a company’s sales can rise while its profits fall. It may even post a loss despite revenue growth if expenses increase or other items have an impact.

That is also why looking at a single figure in a company’s financial statements is not enough to assess its performance.

How does Elm make nearly SAR 2 billion in profit?

Elm, a company specializing in digital solutions and services, reported net profit of SAR 1.947 billion for the first nine months of 2026, an increase of 18% compared with the same period a year earlier.

Its revenue reached approximately SAR 7.79 billion, up 17%, while third-quarter profit alone came to SAR 778 million.

What do these results mean?

When revenue and profit grow together, this may indicate business expansion and an improved ability to generate returns. But an accurate assessment requires understanding the sources of growth, the level of expenses, and how much of the profit came from non-recurring items.

The results show that Elm’s growth was supported by its digital services, business outsourcing, and professional services segments, as well as other financial factors.

Here, it is important to distinguish between a digital company and an AI company.

A digital company may offer online platforms, technology services, and systems for managing business operations and data, while AI is one of the fields that can be applied within those services.

In other words, we should not treat all the profits of a digital company as AI-generated profits unless the company discloses the contribution of that specific business.

The most important economic question is not just: How much profit did the company make?

It is: Which activities generated those profits, and can they be sustained in the years ahead?

Go Telecom’s SAR 186 million project: has it become profit?

In another announcement, Go Telecom said it had awarded a SAR 185.9 million project to Full Triangle Technology Company to supply and install infrastructure for a cloud data center dedicated to AI.

The project includes advanced computing systems from Dell Technologies, equipped with graphics processing units from NVIDIA, as well as the servers, systems, and licenses required for operation.

But what does this mean financially?

The project’s value is not net profit, and it is not necessarily revenue that has already been earned.

Go Telecom is the company that announced the award of the project to a contractor; it is not the company that will automatically receive SAR 185.9 million as profit.

This figure represents the announced contractual cost of equipping the project. Go Telecom is expected to benefit in the future from the services the data center will enable, if it becomes operational and the company succeeds in attracting customers and generating revenue.

The company clarified that the financial impact would be determined later, once the requirements and procedures for signing the contract had been completed.

This brings us to three important economic terms.

Project award means selecting the party that will carry out the work under the approved procedures. It does not necessarily mean that all contractual obligations have been finalized.

Infrastructure refers to the basic facilities and equipment a business needs to operate. In real estate, this includes roads, electricity, and water networks; in data centers, it includes servers, cooling systems, communications, and power.

Capital investment is a company’s spending on assets it expects to use for several years, such as buildings, machinery, and technology equipment.

Therefore, equipping a data center at significant cost does not guarantee profits, but it may provide the operational capacity needed to deliver future services.

The project’s success depends on several factors, including demand for its services, the prices charged for them, operating, maintenance, and electricity costs, and how effectively the available computing capacity is used.

This leads to an important question: will every investment in AI become profitable?

The answer is: not necessarily.

The technology may be promising, but a company investing in it needs a business model capable of turning its technological potential into sustainable revenue, profits, and cash flows.

Why can a real estate company lose money even as its revenue rises?

On the real estate side, Jabal Omar Development reported a loss of SAR 261.61 million in the third quarter of 2026, compared with a profit of SAR 197.85 million in the same quarter a year earlier.

The surprising part is that the company’s revenue rose by 14.2% in the same quarter, reaching approximately SAR 370 million.

How can revenue rise while a company swings to a loss?

The results show that the comparison was affected by several factors, most notably a decline in the exceptional gains the company had recorded in the same period a year earlier from the sale of land, alongside changes in financing costs and certain accounting items.

To understand this, imagine a real estate company that owns a hotel and a plot of land.

The hotel generates revenue from guests, while the company may make a large profit in a particular year by selling the land.

If it sells the land this year, its profits may rise exceptionally. But the following year, even if hotel revenue improves, total profits may fall because the land sale is not repeated.

This is known as non-recurring profit—a gain arising from events that are not expected to recur regularly as part of ordinary business activity.

It is therefore essential to distinguish between profits generated by core operations and those resulting from the sale of an asset, a financial settlement, or an exceptional event.

How can Jabal Omar make a profit over nine months but post a loss in the third quarter?

The results reveal another apparent contradiction.

Jabal Omar recorded a loss of SAR 261.61 million in the third quarter, but made a profit of SAR 13.51 million over the first nine months of the year.

Is there a contradiction between the two figures?

No.

When we read results for the “first nine months,” we are looking at the combined results of the first, second, and third quarters of the financial year.

This is known as cumulative results or results for the financial period.

If a company makes SAR 100 million in the first quarter and SAR 150 million in the second, then loses SAR 80 million in the third, its profit for the first nine months will be SAR 170 million.

So a company can post a loss in one quarter and still be profitable when the results of previous periods are combined.

The reverse is also true: a company may make a profit in the third quarter but still be loss-making over the first nine months if its losses in the first two quarters were greater.

That is why it is always important to pay attention to the period stated alongside each figure.

Third-quarter results are not the same as results for the first nine months, and cumulative results do not represent the final quarter’s profit alone.

What do Emaar the Economic City’s losses reveal?

Emaar the Economic City reported losses of SAR 444 million for the first nine months of 2026, compared with losses of SAR 351 million in the same period a year earlier.

It also posted a quarterly loss of SAR 241 million in the third quarter.

Revenue for the first nine months fell by 37% to SAR 429 million.

The results show that the decline in revenue was partly linked to lower revenue recognized from real estate development projects that had already been completed or handed over, alongside an increase in certain provisions, despite lower financing costs.

This brings us to an important term in real estate: revenue recognition.

A real estate company may sell units under construction, but it does not necessarily record the full sale value as revenue on the day the contract is signed.

Depending on the nature of the contract and the accounting standards, it may recognize revenue gradually as work is completed, or when control of the asset transfers to the customer.

That is why real estate companies’ revenue can change significantly from one quarter to another, depending on project completion and handover stages.

Major real estate projects also typically require years of development and operating expenses before they reach stable revenue levels.

But a long project cycle is not a sufficient reason to ignore losses.

It is also essential to monitor debt, cash flows, financing costs, and the company’s ability to meet its obligations.

An accounting loss does not always mean cash has left the business

When a company reports a loss of SAR 100 million, readers may assume that this entire amount has left its bank accounts.

But it is not that simple.

Some accounting expenses do not require a cash outflow in the same period.

One example is depreciation, which spreads the cost of a long-term asset over the years it is used.

If a company buys equipment for SAR 10 million, it may not record the entire cost as an expense in the year of purchase. Instead, it allocates the cost in its accounts over the asset’s expected useful life, in accordance with the relevant policies and standards.

Conversely, a company may report accounting profits but struggle to generate cash if customers are late paying their bills.

That is why the cash flow statement matters: it shows the cash flowing into and out of a company’s activities.

The key question is: can the company generate cash from its core business, or does it continually rely on borrowing or selling assets to fund its operations?

Are we facing an AI bubble?

This brings us to the question raised by the comparison between technology and real estate.

In economics, a price bubble occurs when the price of a financial or real estate asset rises to levels that are difficult to justify based on its expected economic returns, with some of the demand driven by the expectation that the price will continue to rise.

Suppose a company earns SAR 10 million a year, and investors value it at SAR 200 million.

Then, over a short period, its valuation rises to SAR 2 billion without a comparable increase in its profits or expected cash flows.

At that point, we should ask: what has changed in the company’s ability to generate future profits to justify that valuation?

There may be genuine expected growth that justifies some of the increase, or expectations may have become excessive.

The difference between these two possibilities lies at the heart of the debate about bubbles.

But it is important to remember that the existence of a revolutionary technology does not prevent an investment bubble from forming around it.

The technology may be genuinely useful and influential, while investors overestimate how quickly it will spread or how much profit it will generate.

A well-known example is the dot-com bubble of the late 1990s, when valuations of many companies soared on expectations of growth, before the prices of many of them fell sharply.

Even so, the collapse in those stock prices did not mean the internet itself had failed; the internet later became the foundation for enormous economic sectors.

The lesson is that a successful technology does not make every company investing in it successful, just as a company’s operational success does not mean its stock is worth any price the market is willing to pay.

How can we tell when prices may be excessive?

There is no single signal that can prove a bubble exists before it bursts, but several indicators can help assess the risks.

One is the price-to-earnings ratio, which compares a company’s share price with its earnings per share.

If a share costs SAR 100 and annual earnings per share are SAR 5, the price-to-earnings ratio is 20.

Put simply, this means the investor is paying SAR 20 for every SAR 1 of current annual earnings attributable to the share.

But a high ratio does not automatically mean there is a bubble; investors may pay more for a company whose earnings they expect to grow in the future.

The issue becomes more sensitive when prices depend on exceptional growth expectations that are difficult to achieve.

Other important indicators include a company’s ability to turn revenue into profits and cash flows, the size of its debt, and the amount it needs to spend to sustain its growth.

In AI, for example, companies may need to spend heavily and repeatedly on processors, servers, electricity, and cooling.

If paid demand for their services does not grow as expected, returns may fall short of the estimates on which investment decisions were based.

Finally: is capital shifting from real estate to AI?

Recent announcements may reflect growing investment in digital technologies and computing infrastructure, alongside financial challenges facing some real estate development companies.

But the results of four companies are not enough to conclude that capital is leaving real estate for AI, or that a new bubble is already forming.

The two sectors differ in their business models, investment cycles, revenue sources, and the nature of their assets and costs.

Moreover, comparing losses at real estate companies with profits at a digital company and the value of a technology project combines three different indicators that should not be treated as though they were one and the same.

Even so, these results offer an important economic lesson.

Revenue is not profit, a project’s value is not realized revenue, an accounting loss does not always mean a cash outflow, and a rising share price is not conclusive proof that a company is successful.

A bubble is not measured simply by the amount of investment in a particular sector, but by the potential gap between asset prices and the economic value they can generate in the future.

So perhaps the more useful question is not: Is real estate losing while AI is winning?

It is: Can companies in any sector turn their investments into sustainable returns that justify the money investors pay for them?

In economics, knowing how much money has been invested is not enough; what matters more is knowing what value that money can produce.