Hundreds of Billions in Oil Money Flow into AI, Yet Middle East Faces Limits to 'Sovereign AI'

Based on Nvidia H100 Metrics
UAE and Saudi Surpass China in AI Infrastructure
Middle East AI Drive Stuck in Investment-Led Growth

The Middle East is deploying its oil wealth to open a new front in the global race for artificial intelligence (AI) dominance, seeking to redefine its economic model beyond oil. To this end, Gulf Cooperation Council (GCC) members — notably the United Arab Emirates (UAE) and Saudi Arabia — are pouring hundreds of billions of dollars into data centers, AI semiconductors, and power infrastructure. Their goal is to emerge as a “third pole” in a tech order long dominated by the United States and China. Yet, experts caution that without homegrown expertise and technological capacity, the region’s AI drive risks being confined to investment-fueled growth.

Middle East Nations Rank Second and Third in Global AI Infrastructure

According to a 2025 analysis by U.S.-based data center firm TRG, the United States tops the global AI infrastructure ranking with computing power equivalent to roughly 39.7 million Nvidia H100-class chips. The UAE follows with around 23.1 million units’ worth of capacity, and Saudi Arabia ranks third with about 7.2 million. In terms of power capacity, the UAE operates AI data centers totaling 6,400 megawatts (MW), while Saudi Arabia’s reach 2,400 MW—far surpassing China’s 289 MW (roughly 400,000 H100 units) and exceeding the levels of major European economies such as France, Germany, and the United Kingdom by more than tenfold.

This rapid ascent stems from Gulf oil producers’ strategic pivot from energy dependence to AI-based knowledge economies, backed by multi-hundred-billion-dollar investments. Saudi Arabia, for instance, launched a $40 billion AI fund last year to target semiconductors, data centers, and AI ventures. Under its sovereign wealth fund (PIF), AI firm HUMAIN has partnered with Qualcomm to build advanced AI data centers, while Google Cloud and PIF are collaborating on a $10 billion global AI hub in the kingdom.

The UAE, which in 2017 became the first nation to appoint a Minister of AI and adopt a “National AI Strategy 2031,” is pursuing similar ambitions. State-backed AI company G42, in partnership with OpenAI and Nvidia, is leading the “Stargate UAE” initiative — a mega data center complex initially planned at 1 gigawatt (GW), with expansion to 5 GW envisioned.

Massive Investments Flow into U.S. AI Firms

The Gulf’s AI surge is part of a broader strategy to transition from an oil-dependent to a knowledge-driven economy, and U.S. firms are among the main beneficiaries. Anthropic, the American AI startup, exemplifies this trend. Last month, it raised $13 billion in fresh capital, pushing its valuation to $183 billion, with Qatar Investment Authority (QIA) as a major investor. QIA’s head of technology, media, and communications, Mohammed Al-Hardan, praised Anthropic’s enterprise AI and coding automation capabilities, calling it “a defining player in the corporate AI market.”

Anthropic had previously been cautious about taking Middle Eastern capital. But CEO Dario Amodei signaled a pragmatic shift in a July internal memo, writing, “Middle Eastern investments can enrich autocrats, but a company cannot operate on the principle that bad people should never profit.” Rival firms have already opened their doors to Gulf funding. The UAE’s MGX has invested in OpenAI’s Stargate project, while Elon Musk’s xAI has drawn financing from QIA, MGX, and Saudi Arabia’s Kingdom Holding.

Qatar plans to invest over $500 billion in the United States over the next decade, with up to 25 technology deals scheduled for this year and next, spanning semiconductors, data centers, and software. QIA is also exploring AI’s potential in media production. “Generative technology in music, photography, and video is particularly compelling,” Al-Hardan said, citing prospective partnerships with Hollywood studio North Road Company.

Vision for an ‘AI Third Stack’

Industry analysts view these moves as part of a bid to establish an “AI third stack” amid intensifying U.S.-China technological rivalry. Washington has tightened export controls on AI chips, expanding restrictions to include lower-end Nvidia and AMD models, and even revoked export licenses for certain suppliers to Huawei in May.

The Trump administration’s acceleration of “AI diplomacy” during its May tour of the Middle East underscored this dynamic. President Donald Trump leveraged the trip to strengthen U.S. influence, rewarding oil-rich allies’ massive investment pledges with access to cutting-edge Nvidia chips. This linkage of AI technology to U.S. diplomatic and trade strategy aligned with the Gulf states’ own ambitions to leverage oil wealth for technological ascendancy — sparking a wave of AI mega-deals.

According to the U.S. Department of Commerce, Saudi Crown Prince Mohammed bin Salman has pledged $600 billion in U.S. investments over the next four years, while the UAE has committed $1.4 trillion over the next decade. Abu Dhabi’s sovereign fund Mubadala recently acquired a stake in Intel subsidiary Altera and inked a $1.5 billion AI partnership with Microsoft, deepening its collaboration with American tech firms.

Still, experts remain skeptical that the Middle East can emerge as a true power center in AI. While infrastructure expansion has been dramatic, the region still lacks the human capital and research ecosystem necessary to sustain technological leadership. As analysts note, even the most advanced data centers and vast financial resources cannot substitute for internalized expertise. Without that foundation, the Gulf’s AI boom may remain an externally fueled expansion of capital rather than a genuine transformation in innovation.