Life After Oil: The Middle East Bets Big on its AI Future
The Middle East is steadily transitioning its attention from fossil fuels to technology.
The region’s AI sector is expanding at pace, drawing international investment whilst initiatives like Stargate establish new standards for technological infrastructure As AI transforms the world economy and fossil fuels face decline, numerous Gulf nations are seeking fresh primary exports.
“Compute is the new oil,” says Mohammed Soliman, Senior Fellow at the Middle East Institute in Washington DC.
It’s an apt comparison for a region that has established its wealth on black gold.
In the same way that Gulf oil enterprises fuelled the world economy during the previous century, regional AI companies now aim to provide “compute" — the enormous processing capacity delivered by chips and data centres — to drive the 21st century’s increasingly digital economy.
The Middle East possesses abundant capital and excellent infrastructure, providing it with a solid foundation for developing a thriving AI industry.
The shift is already in motion.
When Donald Trump travelled to the UAE this year, he carried with him pledges of a US$100bn investment in the region’s technological advancement.
Inside Stargate
At the heart of Trump’s visit was the unveiling of an expansive new AI facility — a collaborative effort between the UAE and the US that has been described as the largest AI infrastructure centre beyond North America.
The multi-billion-dollar ‘Stargate’ initiative marks the Gulf’s most ambitious attempt yet to establish its AI aspirations on the global stage.
The scheme will include a substantial data centre complex for OpenAI and other American companies in Abu Dhabi. This specific initiative will receive funding from G42, a Middle Eastern state-connected technology company spearheading the nation’s AI goals.
The project’s details are remarkable and utilise the knowledge of some of the globe’s most prominent technology corporations:
Nvidia will provide its most sophisticated chips Technology leaders Cisco and Oracle are constructing the initial phase Japan’s SoftBank is also participating as a major partner The complex will accommodate the data centres required to develop powerful AI systems
“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, the UAE’s largest data centre operator.
Khazna, which has majority ownership by G42, presently runs 29 data centres throughout the UAE and is developing the infrastructure for Stargate.
Saudi Arabia kickstarts its AI sector
The UAE is not the only Gulf nation AI ambitions.
Saudi Arabia’s Public Investment Fund has introduced Humain, a national AI enterprise planning to construct AI facilities powered by hundreds of thousands of Nvidia chips during the coming five years.
Government-owned investment company Mubadala has supported G42 and MGX — a US$100bn AI-centred joint venture with Microsoft as a principal technology partner.
This appears to indicate a change in focus for the Middle East’s leading powers. Gulf sovereign wealth funds have shifted from being passive stakeholders in international tech companies to becoming direct participants in the AI sector themselves.
Drawing highly-qualified AI professionals will present a challenge for the region, however.
For many years, several of the Gulf’s richest nations have attempted to entice specialist professionals to work in the Middle East, providing substantial salaries and minimal taxation.
The UAE seeks to employ this strategy again, providing long-term “golden visas" to individuals and reduced regulations to international companies and researchers.
“Building world-class digital and AI infrastructure will act as a magnet,” says Baghdad Gherras, Chief Data Officer at Medad Holdings LLC.
This transformation will not occur immediately. The region has not yet created a worldwide recognised AI enterprise like OpenAI, Mistral or DeepSeek, and it continues to lack an extensive pool of elite research expertise. Attracting these specialists may become a costly endeavour, judging by the present market conditions.
The geopolitical underpinnings
The Gulf’s AI objectives have naturally brought the region into the US-China technology competition. Trump’s visit provided Washington with a significant advantage in the region’s AI contest, though not without expense.
As part of its strategic realignment, the UAE has reduced some China-supported projects and decreased its dependence on Huawei equipment.
“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,” explains Mohammed.
The “AI stack" he mentions refers to the complete network of America’s AI capabilities: chips, infrastructure, models and software — markets that are largely controlled by US corporations like Nvidia.
“At this stage the Americans are ahead in the AI game. So, it made sense for the UAE to bet on them,” Baghdad says.
