Gulf makes a big bet on AI because it wants ‘new oil’

When Donald Trump touched the United Arab Emirates (UAE) earlier this year, he arrived not only in the headlines, but also with deals, ambition and AI firepower.

The US President was given a royal reception, but the actual center of the trip was the announcement of a new AI campus – a joint UAE -US initiative.

The largest AI Infrastructure Hub outside the US was billed, it was a symbol of the Gulf’s most adventurous dialect to plant itself in the heart of the global AI map.

Trump’s journey in the Gulf also took place with a strategic change, in which the White House reduced restrictions on exports of the most powerful microchips to both UAE and Saudi Arabia from US firm Nvidia.

The move underlined how much the US now sees its Gulf colleagues as a partner in a comprehensive technical alliance.

The Gulf states are deploying their sovereign wealth, geography, and energy edges (lots of oils) to keep themselves as AI Hubs. Technology is central for their plans to reduce future dependence on fossil fuel earnings.

The UAE is, especially, leading the charge. And data centers lie in the heart of this effort. Abu Dhabi has announced a large data center cluster for Openai and other American firms as part of the “Stargate” project.

The multibelian dollar deal is being funded by G42, an Emi-Linked Tech firm that runs the country’s AI ambitions. NVIDIA will supply its most advanced chips.

Tech giant Cisco and Oracle are also working with G42 to build the first phase with Japan’s softbank.

Hasan Alnakbi, CEO of Khajna, the UAE’s largest data center operator, says, “As the Emirates helped to convert the UAE into a global center for air travel, now the UAE is in a phase where it can become an AI and data hub.”

Khajna, which is owned by G42, is building infrastructure for Stargate. The company currently operates 29 data centers in the UAE.

The UAE and Saudi Arabia want to host the data centers required to train the powerful AI models. “Compute is new oil,” says Mohammad Soliman, senior partner of the Middle East Institute at Washington DC.

In terms of AI, the compute refers to the giant processing power enabled by high-ended chips and large-scale data centers-the way the Gulf is now investing billions to build.

In today’s AI -run world, the infrastructure is a new fuel – similarly the oil was in the industrial age.

Mr. Soliman says that as soon as the Gulf -based oil companies operated the global economy in the last century, the AI firm in the region now wants to offer “calculations” to give power to the global economy of 21st.

Gulf Sovereign Funds have added billions to foreign technical giants in recent years. But now, they are pivying to be passive investors for more active players.

In Saudi Arabia, the Public Investment Fund (PIF) plans to manufacture “AI factories” run by several hundred thousand NVidia chips over the next five years.

In the UAE, the state -owned investment firm Mubadala has supported the G42 and MGFX – a $ 100BN (£ 75BN) AI -concentrated joint venture – and supported other homegron initiatives.

However, attracting highly skilled AI talent remains an important challenge. To address this, the UAE entice to foreign companies and researchers with lower taxes, long -term “golden visas”, and light regulation.

“The construction of world class digital and AI infrastructure will serve as a magnet,” says the UAE-based AI start-up and founder of an enterprise investor, Baghdad Gieras.

Currently, the region has yet to produce a globally recognized AI company such as Openi, Mistral or Dipsek, and still lacks a deep back of world class research talent.

Mr. Gaheras points to the small population of the UAE – just more than 10 million – as a limited factor in the creation of a large -scale research ecosystem.

The emergence of the Gulf states as ambitious AI players has taken the US-China Tech rivalry at the forefront of the desert.

Trump’s visit gave Washington a strong leadership in the region’s AI race – but at a cost. As part of its strategic pivot, the UAE has increased some China-supported projects and reduced its dependence on Huawei Hardware.

The emphasis on AI deals during Trump’s visit underlines the increasing strategic importance of technology for American diplomacy.

Traditionally, the American-torn relationship is concentrated around the oil-ke-security. But dynamic is now moving towards energy, safety – and technology.

At the Middle East Institute, Mr. Soliman says that the AI deals signed during Trump’s visit are “more about China about Gulf”.

“It is basically trying to bring a promising, growing AI region – which is the Gulf – in the American AI Stack, to be on the team America AI,” he says.

The “AI Stack” refers to the full pipeline of AI capacity: chips, infrastructure, models, and software – dominating by most American companies.

Mr. Gharsa says that the selection of America on China was a rational option.

“At this stage the American AI is ahead in the game. Therefore, it was understood to bet on them for the UAE,” they say.

However, according to a report by Reuters, the Multibilion-Doller Stargate deal is still waiting for security approval, as American officials are concerned about potential Chinese personnel or technology that are included in the UAE data centers.

Nevertheless, the project is expected to move forward, US firms ralled behind it.

But when America currently goes to AI, Mr. Soliman is underestimated by China.

“They are scaling fast. They already have an AI stack. It may not be as powerful as America, but it is cheap. And for many countries, it is quite good.”

For now, however, both the US and Gulf stand to benefit with their cooperation.

The US achieved colleagues in its search to beat Chinese in the field of AI and calculate – Gulf nations get a powerful partner in their search for replacement of oil revenue.