Energy-rich Gulf monarchies are vying to become hubs for electricity-guzzling artificial intelligence infrastructure, as they bet on the technology to power everything from economic diversification to government services.
Deals unveiled during US President Donald Trump’s visit to the region this month showcased Saudi Arabia and the United Arab Emirates’ aspirations to become AI superpowers.
This includes a partnership between chip giant Nvidia and Humain, a newly formed and Saudi state-backed AI group that has ambitious plans to launch a $10bn venture fund and secure investment from US tech companies.
Abu Dhabi has announced a gargantuan data centre cluster for OpenAI and other US companies as part of their “Stargate” project. The Emirate, which manages $1.7tn in sovereign wealth funds, is investing billions through AI fund MGX, and its Mohamed bin Zayed University of Artificial Intelligence (MBZUAI) is opening a centre in Silicon Valley.
Gulf states “have the capital, the energy, the political will”, said Sam Winter-Levy, fellow at the Carnegie Endowment for International Peace. “The only thing these countries didn’t have were chips and talent. Now [after Trump’s visit] they may have chips.”
The region’s vast AI ambitions could still face challenges, experts warn. Both countries lack the skilled workforces of Silicon Valley or Shanghai, and research output has trailed other nations.
Meanwhile, human rights groups have raised ethics concerns over autocratic monarchies’ use of surveillance, while US experts have cautioned about leaks of American technology to China.
Saudi Arabia and the UAE are ploughing investment into AI as they bank on the fast-developing technology to help them turbocharge economic diversification, reducing reliance on volatile fossil fuel revenues.
The two countries also want to host the huge data centres needed to train and run powerful AI models. Humain plans to build “AI factories” powered by several hundred thousand Nvidia chips over the next five years.
Fellow US chipmaker AMD pledged to provide chips and software for data centres “stretching from the Kingdom of Saudi Arabia to the United States” in a $10bn project.
While providers of heat-emanating data centres usually choose cooler regions, Gulf states argue plentiful land and cheap energy outweigh roasting summer temperatures.
Although the Gulf plans to offer use of expensive facilities to neighbouring countries in Africa and Asia that might struggle to finance their own, most business will probably come from US companies such as OpenAI, which announced it was expanding its $500bn Stargate project in the UAE.
For all its ambition, the Gulf has no breakout company building widely used frontier AI models like OpenAI, China’s DeepSeek or France’s Mistral, and lacks a high concentration of AI research talent, according to OECD data.
Instead, state-related entities are tasked with cutting-edge research, while royal leaders drive developments. Local research efforts have included producing Arabic large language models.
Abu Dhabi’s Advanced Technology Research Council, chaired by Abu Dhabi crown prince Sheikh Khaled, has 1,300 researchers, produced several large language models and is working on versions that can be used by companies.
Eric Xing, MBZUAI president, argued that the UAE had lower levels of research output because of its small 10mn population and relatively nascent higher education system. “We focus more on quality rather than quantity,” he said.
Academics affiliated with the six-year-old institution have published on subjects such as modelling proteins, but the leading work in the area has come from western groups such as Google’s London-based AI unit DeepMind.
To attract top AI talent, the Gulf states are wooing overseas AI companies and researchers with low taxes, longer-term “golden visas” and lax regulation.
Data gathered from jobs network LinkedIn by the OECD shows the third highest level of migration by people with AI skills between 2019 and 2024 was to the UAE, with the Gulf state coming behind other low-tax jurisdictions Luxembourg and Cyprus.
The Gulf is pursuing partnerships with western players to boost its tech aspirations. Last week, the UAE’s AI group G42 announced it was partnering with Mistral to develop AI platforms and infrastructure. G42 has also partnered with US chipmaker Cerebras, which runs its supercomputers. Last year it enlisted help from Microsoft, which invested $1.5bn for a minority stake.
Microsoft “are providing us engineers”, said Dimitris Moulavasilis, chief executive of G42’s healthcare subsidiary M42, which uses AI models in patient care. “We have a lot of joint projects that we’re working on.”
“No nation can do this on its own,” said Karim Sabbagh, managing director of satellite and mapping company Space42, whose customers are mostly federal and local governments in the UAE. “Ultimately it has to be a coalition of like-minded players.”
G42 chair and the UAE’s national security adviser, Sheikh Tahnoon bin Zayed al-Nahyan, has been at pains to cultivate an alliance with the US, promising that in the AI race, the UAE had chosen Washington over Beijing.
Space42, part of G42, and Saudi Arabia’s Humain have also said they would not train their AI on Chinese-made models.
But many in the US security establishment worry whether the Gulf states, hurrying to become AI challengers, will remain faithful.
“The concern will be that in their ambition to be competitive, [Gulf countries] take a short-cut and use a lot of Chinese labour or even Chinese companies,” said Jimmy Goodrich, the RAND Corporation’s senior adviser for technology analysis. “That opens up the aperture in terms of security risks.”
Chinese companies could work around restrictions on critical US technology to train their models in the Gulf, he added.
The region has been stymied by export controls on US-made semiconductors, imposed over concerns about leakage to China.
The Trump administration has moved to loosen these to ensure US dominance, but Democrats have criticised the AI deals made during Trump’s Gulf visit, saying it is unclear how the UAE and Saudi will stop Chinese entities accessing the chips.
Even if the Gulf can import a higher volume of chips, experts anticipate there will still be stringent controls.
It “will come with strict compliance obligations”, said Haykel Hajjaji, a lawyer at Covington who sits on the AI Task Force of the US-UAE Business Council. This could include “heightened mechanisms to prevent diversion to sanctioned jurisdictions or entities”, he added.
Beyond building AI infrastructure for American hyperscalers, the Gulf needs more homegrown companies. Baghdad Gherras has just quit his full-time job at a family office to launch start-up SemanticPay in the UAE, which will build infrastructure to allow AI agents to make online payments.
“I’m not the only one,” Gherras said. “We need to start building AI applications because that’s the only viable use of compute for these data centres.”
