Sovereign Wealth and the Global AI Economy
Saudi Arabia and the UAE in the race for a regional AI hub
The GCC’s AI Gambit
The UAE and Saudi Arabia are making big moves in artificial intelligence, and their latest announcements show just how seriously they are investing in the industry. The UAE has committed to building what will be the largest AI campus outside of the United States—a massive five-gigawatt facility in Abu Dhabi. It is being developed by G42 in partnership with major U.S. tech companies and is part of a broader initiative called the U.S.-UAE AI Acceleration Partnership. Saudi Arabia, meanwhile, has launched its own ambitious AI project under its SWF, the Public Investment Fund. The new subsidiary, HumAIn, will work alongside NVIDIA to establish AI factories with an initial five-hundred-megawatt capacity. These investments are not just about tech—they are key to positioning these Gulf nations as central figures in the global AI economy.
Why the Gulf is Betting Big
There are two key drivers behind this strategy. First, AI is emerging as an economic power play, much like oil was in previous decades. The UAE and Saudi Arabia do not want to be end consumers of foreign AI technologies; they want to shape them and hold meaningful stakes in the industry. If data is the new oil, they are making sure they hold a commanding stake.
The second reason has to do with the resources that AI development requires—namely, access to cheap energy and significant capital. AI factories demand huge amounts of power, and the Gulf is uniquely positioned to supply it, whether through oil, gas, or renewable energy projects. On top of that, the SWFs of these nations have the financial flexibility to take a long-term strategic view, investing in AI infrastructure with patience that many private investors simply cannot afford.
Announcements Are One Thing—Deployments Are Another
There is a significant gap between announcements and actual deployment. It is one thing to 'commit' billions to AI infrastructure, and another to ensure these investments translate into operational successes. Large-scale projects of this nature require extensive cross-border negotiations, with technology firms on one side seeking funding and sovereign wealth funds on the other determining where and how to deploy their capital. Intellectual property is not on the table.
Beyond that, building an AI ecosystem is not just about data centres—it is about attracting talent, securing supply chains for advanced semiconductors and establishing regulatory frameworks that balance innovation with security concerns. While the UAE and Saudi Arabia have taken confident steps forward, turning these commitments into fully functional AI hubs will take time. The UAE, with investments into Arabic LLMs and early investments in the space are one step ahead.
Saudi vs. UAE: Two Different Games
Despite their shared ambition, the two countries are approaching AI investment from different angles. The UAE, with its strong foreign direct investment flows, has the agility to move quickly, making targeted investments even amid fluctuations in oil prices. Saudi Arabia, on the other hand, is still closer to the starting line in its race for economic diversification, driven by petro-state capitalism. It has multiple priorities to balance, including domestic social spending, its portfolio of giga projects and its broader efforts to reposition itself as a global investment hub. AI is a priority, but it is one line in a number of expenses in a long list of CAPEX leading to 2030.
The Bottom Line
AI firms and Gulf’s SWFs are a match made in heaven. It is at the apex of Capital, Energy and Technology. There is the hope that these early investments will anchor the region’s position in AI over the long term, yet AI remains a young and rapidly evolving industry. The challenge will be ensuring that these investments translate into meaningful influence rather than expensive experiments.
The UAE and Saudi Arabia are both aiming high, but success in AI will not come down to capital—it will depend on strategy, execution, and the ability to navigate the geo-economic complexities of a sector that is still taking shape.