Middle East Data Centres Fuel AI Ambitions and Geopolitical Influence

How the Middle East Data Centre Sector Can Spur AI Dominance

The Middle East is shifting its focus from fossil fuels to technology, with Gulf nations accelerating data centre development to support AI growth, attract talent, and become digital hubs for sovereign infrastructure in a post-oil era.

Moving away from hydrocarbons, the Gulf is investing heavily in digital infrastructure, especially hyperscale data centres. These facilities will form the backbone of the region’s AI ambitions, positioning it as a leader in AI compute power.

“Compute is the new oil,” says Mohammed Soliman, Senior Fellow at the Middle East Institute in Washington DC. Instead of exporting crude oil, the goal is to export processing power — the compute delivered by data centres equipped with advanced GPUs. The region’s deep capital reserves, affordable renewable energy, and strong infrastructure provide a solid foundation for this shift.

Stargate Leads with Hyperscale Ambition

At the center of this change is Stargate, a flagship AI and data centre project backed by the UAE’s state-linked firm G42. Developed in partnership with OpenAI and other US tech companies, Stargate aims to become the largest AI infrastructure hub outside North America.

Stargate’s large-scale data centres are purpose-built to train and deploy advanced AI models, serving OpenAI and other US firms. Cisco and Oracle are constructing the facilities, while Nvidia supplies top-tier GPU chips. SoftBank is also a key partner in the initiative.

“Just like Emirates helped turn the UAE into a global hub for air travel, now the UAE is at a stage where it can become an AI and data hub,” says Hassan Alnaqbi, CEO of Khazna. Khazna, majority-owned by G42, operates 29 data centres in the UAE and is leading infrastructure development for Stargate.

Regional Expansion and Sovereign Strategy

Saudi Arabia is also expanding its data centre capabilities. Its Public Investment Fund launched Humain, a national AI company building AI factories with hundreds of thousands of Nvidia chips. Meanwhile, Mubadala supports G42’s joint venture with Microsoft — MGX — investing US$100 billion in AI infrastructure and cloud technology, including AI-optimized data centres.

Baghdad Gherras, Chief Data Officer at Medad Holdings LLC, notes that these investments will attract global researchers and companies. “Building world-class digital and AI infrastructure will act as a magnet,” he says.

To draw talent, the UAE offers long-term “golden visas” for data scientists, engineers, and researchers. Regulations are being eased to simplify operations for international companies.

Challenges remain. The region has yet to produce an AI firm on the scale of OpenAI or Mistral. Building research excellence to match infrastructure ambitions will require time and investment.

Geopolitics Behind the Racks

AI infrastructure in the Gulf now plays a role in the geopolitical and technological competition between the United States and China. The UAE’s recent moves reflect a tilt towards Washington, scaling back reliance on Chinese technology and Huawei hardware to better integrate with the US-led AI ecosystem.

“It's basically us trying to bring a promising, rising AI region – which is the Gulf – into the American AI stack, to be on Team America AI,” says Mohammed Soliman. The “AI stack” includes everything from chips and data centres to software and models, most of which are dominated by US companies like Nvidia and Microsoft.

Baghdad Gherras adds, “At this stage the Americans are ahead in the AI game. So, it made sense for the UAE to bet on them.”

As the Middle East builds its hyperscale data centre footprint, these facilities are becoming strategic infrastructure assets. AI is set to define the region’s economic path beyond oil.

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