After raking in trillions of dollars in oil revenue, the Gulf monarchies have become known for splashing cash on big-ticket projects like sci-fi-worthy cities in the desert, major sports franchises, and advanced military hardware.
Now, though, as they face prolonged lower crude prices, some of the region’s leaders are looking at leveraging their vast sovereign capital to build domestic artificial intelligence industries.
Saudi Arabia, the United Arab Emirates and Qatar in particular are spending billions of dollars on data center projects with partners including Microsoft and OpenAI, among others. They’re also attempting to buy chips in huge numbers from Nvidia and AMD to fuel their AI ambitions — a move which has caught the attention of the U.S. Commerce Department.
After U.S. President Donald Trump’s trip to Saudi Arabia, the UAE and Qatar in May, Washington hinted it would ease the chip curbs put in place over fears that advanced American semiconductors could reach China via Gulf partners. The Gulf has worked to demonstrate to the U.S., through major deals with stateside tech giants, that it’s chosen America as a strategic technology partner over China.
“The GCC states have the capital and they have the leadership. They see it as strategic, and they are willing to have skin in the game,” Baghdad Gherras, a UAE-based venture partner at Antler, which invests in early-stage AI ventures, told CNBC.
The Gulf’s deep coffers are even luring companies whose executives long opposed doing business with countries they say have poor human rights records.
In July, a leaked memo revealed that Anthropic CEO Dario Amodei was planning to seek Gulf investment despite his prior opposition based on ethical concerns. “This is a real downside and I’m not thrilled about it,” Amodei wrote, according to the memo.
Opportunities and challenges
U.S. tech leaders also like the region’s conducive regulatory environment, unhampered by Western-style bureaucracy, where major policy decisions can be made quickly by rulers.
OpenAI chief Sam Altman, who visits the region often, has highlighted Abu Dhabi in particular as talking about AI “before it was cool.”
But without the vast talent base of the U.S. or China — and with relatively new economies — Gulf capitals have some serious catching up to do when it comes to things like developing local talent pools and infrastructure.
Another key challenge, industry analysts say, is that access to advanced chips like GPUs (graphics processing units) and NPUs (neural processing units) is volatile due to export controls and supply shocks — a risk for any country that does not produce its own semiconductors.
The region also has to convince investors of regulatory and geopolitical stability. In September, Qatar’s capital Doha was hit with strikes as Israel launched a surprise attack on Hamas leaders.
“Escalating regional conflict will remain a concern among potential investors as long as the war between Israel and Hamas continues,” Torbjorn Soltvedt, principal MENA analyst at Verisk Maplecroft, told CNBC.
“So far, the Gulf states have navigated rising geopolitical tensions better than anyone else in the region but the balancing act of remaining neutral is becoming more difficult as the fallout from regional conflict widens.”
Torbjorn Soltvedt, principal MENA analyst at Verisk Maplecroft
Further challenges include building from the ground up an ecosystem of local startups, integrators, and exit pathways, investors say — and convincing the best AI engineers to move to the region. In Saudi Arabia, for instance, AI-related roles remain largely vacant, with a 50% hiring gap.
So, where are Gulf powers investing as they try to stay at the forefront of the technology race?
The UAE
Abu Dhabi is home to three of the most active sovereign funds in the Gulf: ADIA, Mubadala and ADQ, which together manage around $1.7 trillion. That makes Abu Dhabi the wealthiest city in the world in terms of sovereign capital — and the funds have a massive focus on artificial intelligence.
The UAE’s main AI firm is called G42. It’s chaired by the country’s National Security Adviser Sheikh Tahnoon bin Zayed al-Nahyan and run by CEO Peng Xiao.
Microsoft has committed $15.2 billion to the UAE between 2023 and 2029, after investing $1.5 billion in G42. This move gave Microsoft a minority stake in the UAE tech company and a seat on its board.
This week, Microsoft announced that it had been granted a specific license to export advanced Nvidia AI chips to the UAE, although general export controls on advanced AI chips have not been lifted for the region as a whole.
Boasting Mubadala, SilverLake and the Dalio Family Office among its investors, G42 is a private company and doesn’t disclose its value. Its investments in the space include Silicon Valley-based AI chip developer Cerebras, and, prior to selling its stake to appease the U.S., TikTok owner ByteDance.
G42, along with Mubadala, is also one of the founding partners of a tech investment vehicle called MGX, which has a goal of eventually topping $100 billion in assets. MGX has backed OpenAI, Elon Musk’s xAI and is in talks to back Anthropic, a rival to ChatGPT-maker OpenAI. It also invested $2 billion in Binance in the “largest investment ever” in crypto, funded by USD1, a Trump-linked stablecoin.
MGX is also focused on building out data center infrastructure, and made a $40 billion investment, alongside BlackRock’s Global Infrastructure Partners this month to buy Aligned Data Centers. MGX also plans to contribute to Trump’s Stargate venture.
The UAE Stargate project, which was announced after President Trump’s Abu Dhabi visit, will be a part of the world’s largest set of AI data centers built outside of the United States, the 5GW UAE-U.S. AI Campus. It’s a big deal for the UAE, which plans to use Nvidia chips for the project and has vowed to work closely with Washington to ensure the security of such chips.
Saudi Arabia
Saudi Arabia has its own national strategy to diversify its petro-reliant economy into sectors like technology and manufacturing. Humain is Saudi’s own AI “champion,” launched in May of this year, just a day before Trump’s visit to the Kingdom.
Humain, which plans to deliver AI capabilities across data centers, infrastructure, cloud platforms and advanced AI models, wants to position Saudi Arabia as the region’s AI hub. During the time of Trump’s Gulf visit, Humain announced it would buy 18,000 Nvidia AI chips to use across its data centers, and unveiled a $10 billion partnership with AMD.
Humain, which doesn’t disclose investment targets, is owned by Saudi Arabia’s nearly-$1-trillion Public Investment Fund. It has announced $23 billion for technology strategic partnerships and a $10 billion venture fund.
Humain is also working to create large Arabic language models and establish advanced AI infrastructure. It released an Arabic version of ChatGPT, called Humain Chat, last month.
Humain also has big data-center ambitions, and announced in October it would team up with Qualcomm on data center development, after the company announced new Al chips. Saudi is targeting 1.9 gigawatts of data centre capacity by the end of this decade, jumping to 6.6 gigawatts by 2034. That pales in comparison to the U.S., however, which had 53.73 gigawatts of capacity installed in 2024.
And while Saudi Arabia’s data center market is projected to grow from $1.33 billion in 2024 to $3.9 billion by 2030, the U.S. market is currently valued at over $200 billion.
Qatar
Unlike the UAE and Saudi Arabia, Qatar doesn’t have a sovereign wealth fund-backed AI group like G42 or Humain. Its strategy has a different focus and there don’t appear to be any plans to develop an AI-specific company backed by the Qatar Investment Authority (QIA).
It insists it is not being left behind, however, and describes its national strategy as “AI+X,” effectively integrating artificial intelligence across all sectors, including education, healthcare, governance, and business.
Most of the fund’s technology and media investments “use AI or are AI-related,” a spokesperson for QIA told CNBC. “We invest across the AI value stack, from the infrastructure powering the AI revolution to the LLMs [large language models] businesses and consumers use every day,” they added.
U.S. tech giant ScaleAI, for example, is working with Qatar’s government to develop agents for various sectors, including education, the civil service, transportation, and health.
Data centers fall under the QIA’s Real Estate portfolio, but the fund has separately invested in Anthropic, Databricks, Cresta, and AI-powered autonomous driving solutions firms such as Applied Intuition.
The $524 billion QIA is also one of several investors, including Kingdom Holding, BlackRock and Fidelity, in Elon Musk’s AI startup xAI, which completed a $6 billion funding round in 2024.
Money vs. execution
Despite its financial power, the region still faces physical challenges — like the cost and environmental impact of running and cooling miles of data centers in the Middle East’s scorching deserts.
The average mid-size data centre uses a whopping 300,000 gallons of water a day for cooling and electricity generation, approximately — a figure that will only grow as temperatures rise, according to risk consultancy Verisk Maplecroft.
“Global firms must be convinced the region can offer not only capacity, but neutrality, governance and stability.”
Ulyana Lenvalskaya, MENA tech and consumer analyst at UBS Investment Bank
“Unsurprisingly, the Middle East faces the highest exposure to water stress risks with Abu Dhabi, Dubai and Istanbul all rated as ‘very high’ risk by 2030,” the firm wrote in a July report.
Still, the richest Gulf states are forging ahead, pushing economic diversification and tech dominance to the top of their national agendas regardless of the cost.
The scale of capital being deployed into the space “is significant enough to position the UAE and Saudi as credible hubs beyond just regional relevance,” said Ulyana Lenvalskaya, MENA tech and consumer analyst at UBS Investment Bank.
The final barrier? “Not money, but execution,” according to Lenvalskaya.
The Gulf needs to show it’s capable of “building deep AI talent pipelines, retaining world-class researchers, and ensuring regulatory frameworks that attract global partners,” she said. “Global firms must be convinced the region can offer not only capacity, but neutrality, governance and stability.”
CNBC