UAE’s AI ambitions accelerate with largest data centre outside US in desert

Deep in the Abu Dhabi desert, cranes are rising over a site that industry backers describe as a bet on a post‑oil future: a sprawling AI campus, part of a constellation of projects the United Arab Emirates hopes will replace fading hydrocarbon rents with data‑intensive industry and services. According to the original report, the development , led by G42 and its Khazna Data Centers unit , will eventually host up to five gigawatts of computing capacity and storage, making it the largest AI data‑centre complex outside the United States and able to serve a radius of some 3,200 kilometres.

The first phase, the one‑gigawatt “Stargate UAE” cluster, is being built in partnership with a string of global technology firms and platform players. The company says the cluster will be operated by OpenAI and is backed by Oracle, Cisco and Nvidia, while Microsoft has separately committed large cloud and capital resources: the company announced further multi‑billion dollar investments into the UAE and a strategic minority stake in G42, and will join the governance of the partnership, according to reporting on the deal. Industry data shows that the UAE has channelled very large sums into AI since 2024; the original report states the country has “pumped more than $147 billion into AI since 2024.”

The scale of the hardware build‑out underlines why Gulf states see AI as a national infrastructure play. Data centre projects require vast, reliable power and cooling , resources the UAE can mobilise quickly thanks to fossil‑fuel revenues, plentiful sunlight for solar and close control of planning and capital. “The UAE is punching above its weight because it’s a very small country that really wants to be at the forefront,” Johan Nilerud, chief strategy officer of Khazna Data Centers, told AFP. He added: “The idea is obviously to bring in international partners… to be this AI‑native nation.”

That ambition is matched by a broader regional arms race. Recent deals elsewhere in the Gulf, including a $20 billion joint venture between Brookfield and Qatar’s national AI company Qai to build an integrated compute centre, signal that states across the region aim to capture a slice of the high‑performance computing market. Reuters reporting notes that such projects form part of a wider race to compete with the current market leaders in the United States and China; consultancy analysis cited by the same reporting projects a multitrillion‑dollar requirement for data‑centre investment globally through 2030 to support AI growth.

The UAE has sought to pair infrastructure with talent and research. According to the original report, Abu Dhabi opened the Mohamed bin Zayed University of Artificial Intelligence in 2019 and has folded AI into the education system. University and institute leaders have pushed for domestic models and capabilities: “Sovereignty and self‑sustainability and domestic customisation of technology to local needs are all very, very important,” Najwa Aaraj, executive director at Abu Dhabi’s Technology Innovation Institute, told AFP. MBZUAI and other local labs have produced models such as Falcon and the Arabic‑language LLM Jais, and have expanded research footprints overseas, industry figures show.

Yet innovation at this scale carries geopolitical and technical complications. US policy shifts have been consequential: Reuters records that the US eased export restrictions on advanced Nvidia chips to the UAE and Saudi Arabia, a decision framed as part of co‑operation to manage security concerns and responsible AI deployment. At the same time, the UAE has navigated vendor relationships and security scrutiny, severing some Chinese hardware ties amid earlier US concerns, and seeking diversified supply lines for chips and other critical inputs. “They (UAE) clearly don’t want to be dependent on China, but that doesn’t mean they want to depend on the US either,” Jean‑Francois Gagne, a professor at the University of Montreal, told AFP. He added a note of caution: “Right now, we don’t know what the right strategy is, or who the good players are.”

For industrial decarbonisation stakeholders the implications are twofold. First, the proliferation of hyperscale AI facilities will significantly increase electricity demand in markets where decarbonisation policy, grid capacity and access to low‑carbon power will determine the emissions intensity of growth. Emirates NBD research and other sector studies highlight that the UAE has directed substantial investment into ICT and internet infrastructure and attracted rising greenfield FDI, and Microsoft‑G42 plans include sovereign cloud and AI infrastructure intended to process millions of daily interactions across government and business. Second, the UAE’s approach , leveraging domestic capital and energy to underwrite digital infrastructure , suggests opportunities for integrating large‑scale renewables, storage and advanced cooling technologies into new builds, although the lead reporting emphasises that much of the current advantage still rests on hydrocarbon wealth used to underwrite rapid deployment.

Smaller but immediate projects already underway illustrate this mixed picture. Khazna has broken ground on multiple facilities across Abu Dhabi and Masdar City, adding tens of megawatts of capacity with near‑term delivery dates, while the Stargate project is reported to begin partial operations in 2026 with an initial tranche of capacity using advanced Nvidia chips. The company said these facilities will serve both government and private clients and underpin Abu Dhabi’s stated goal of becoming an “AI‑native” government and economy.

Officials and researchers stress that success is not guaranteed. Industry observers quoted in the original reporting warn that heavy investment is necessary but insufficient: effective regulatory frameworks, access to diverse supply chains, talent retention, and demonstrable commercial demand for AI services will determine which regional bets pay off. As one academic put it to AFP, “AI, like oil, is a transversal sector, which can potentially have a leverage effect and an impact on different activities.” How the UAE marshals those leverage effects , and whether the power underpinning them grows cleaner as capacity scales , will matter both to its economic transition and to decarbonisation efforts across energy‑intensive industry sectors.