The Gulf bets big on AI as it seeks the ‘new oil’

When Donald Trump touched down within the United Arab Emirates (UAE) earlier this 12 months, he arrived not simply with headlines, however with offers, ambition, and AI firepower.

The US president was given a royal welcome, however the actual centrepiece of the go to was the announcement of a sprawling new AI campus – a joint UAE-US initiative.

Billed as the most important AI infrastructure hub exterior the US, it symbolised the Gulf’s boldest bid but to plant itself on the coronary heart of the worldwide AI map.

Trump’s go to to the Gulf additionally coincided with a strategic shift, which noticed the White Home easing restrictions on exporting probably the most highly effective microchips from US agency Nvidia to each the UAE and Saudi Arabia.

This transfer underscored how a lot the US now sees its Gulf allies as companions in a wider technological alliance.

The Gulf states are deploying their sovereign wealth, geography, and vitality edge (a number of oil) to place themselves as AI hubs. Expertise is central to their plans to scale back future dependence on earnings from fossil fuels.

The UAE, specifically, is main the cost. And knowledge centres lie on the coronary heart of this effort. Abu Dhabi has introduced a large knowledge centre cluster for OpenAI and different US companies as a part of the “Stargate” mission.

The multibillion greenback deal is being funded by G42, an Emirati state-linked tech agency driving the nation’s AI ambitions. Nvidia will provide its most superior chips.

Tech giants Cisco and Oracle, together with Japan’s SoftBank, are additionally working with G42 to construct the primary section.

“Similar to Emirates helped flip the UAE into a world hub for air journey, now the UAE is at a stage the place it may well change into an AI and knowledge hub,” says Hassan Alnaqbi, CEO of Khazna, the UAE’s largest knowledge centre operator.

Khazna, which is majority owned by G42, is constructing the infrastructure for Stargate. The corporate presently operates 29 knowledge centres throughout the UAE.

The UAE and Saudi Arabia need to host the info centres wanted to coach highly effective AI fashions. “Compute is the brand new oil,” says Mohammed Soliman, senior fellow on the Center East Institute in Washington DC.

Within the context of AI, compute refers back to the huge processing energy enabled by high-end chips and large-scale knowledge centres – the type the Gulf is now investing billions to construct.

In at the moment’s AI-driven world, infrastructure is the brand new gas – in the identical manner oil was within the industrial age.

Mr Soliman says that simply as Gulf-based oil firms powered the worldwide financial system within the final century, AI companies within the area now need to supply “compute” to energy the worldwide financial system of the twenty first.

Gulf sovereign funds have poured billions into international tech giants lately. However now, they’re pivoting from being passive buyers to extra energetic gamers.

In Saudi Arabia, the Public Funding Fund (PIF) has launched a nationwide AI firm – Humain – which plans to construct “AI factories” powered by a number of hundred thousand Nvidia chips over the subsequent 5 years.

Within the UAE, state-owned funding agency Mubadala has backed G42 and MGFX – a $100bn (£75bn) AI-focused three way partnership with Microsoft – and different homegrown initiatives.

Nevertheless, attracting highly-skilled AI expertise stays a big problem. To deal with this, the UAE is wooing abroad firms and researchers with low taxes, long-term “golden visas”, and lighter regulation.

“Constructing world-class digital and AI infrastructure will act as a magnet,” says Baghdad Gherras, founding father of a UAE-based AI start-up and a enterprise investor.

At the moment, the area has but to provide a globally recognised AI firm like OpenAI, Mistral, or DeepSeek, and it nonetheless lacks a deep bench of world-class analysis expertise.

Mr Gherras factors to the UAE’s small inhabitants – simply over 10 million – as a limiting think about constructing a large-scale analysis ecosystem.

The emergence of Gulf states as formidable AI gamers has introduced the US-China tech rivalry to the forefront within the desert.

Trump’s go to gave Washington a powerful lead within the area’s AI race – however at a price. As a part of its strategic pivot, the UAE has scaled again some China-backed tasks and lowered its reliance on Huawei {hardware}.

The emphasis on AI offers throughout Trump’s go to underscores the rising strategic significance of the expertise to US diplomacy.

Historically, the US-Gulf relationship has centred round oil-for-security. However the dynamic is now shifting towards vitality, safety – and tech.

On the Center East Institute, Mr Soliman says the AI offers signed throughout Trump’s go to “are extra about China than in regards to the Gulf”.

“It is principally us making an attempt to carry a promising, rising AI area – which is the Gulf – into the American AI stack, to be on Staff America AI,” he says.

The “AI stack” refers back to the full pipeline of AI functionality: chips, infrastructure, fashions, and software program – largely dominated by US firms.

Mr Gherras says selecting the US over China was a rational selection.

“At this stage the People are forward within the AI sport. So, it made sense for the UAE to guess on them,” he says.

Nevertheless, in keeping with a Reuters report, the multibillion-dollar Stargate deal remains to be awaiting safety clearance, as US officers stay involved about potential Chinese language personnel or expertise being concerned in UAE knowledge centres.

However, the mission is predicted to go forward, with US companies rallying behind it.

However whereas the US presently leads in AI, Mr Soliman warns in opposition to underestimating China.

“They’re scaling quick. They have already got an AI stack. It might not be as highly effective as America’s, but it surely’s cheaper. And for a lot of international locations, adequate is sweet sufficient.”

For now, although, each the US and the Gulf stand to learn from their cooperation.

The US positive factors allies in its quest to outflank the Chinese language within the area of AI and compute – the Gulf nations get a robust accomplice of their seek for a substitute for oil revenues.