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When Donald Trump visited the United Arab Emirates (UAE) earlier this year, the trip signified more than just diplomatic headlines; it heralded new deals, ambitions, and a focus on artificial intelligence.
The former US president received a formal welcome, but a key moment was the unveiling of a substantial new AI campus—a collaborative project between the UAE and the US.
Billed as the largest AI infrastructure hub outside of the United States, the initiative signals the Gulf’s most ambitious effort to establish itself as a central player in the global AI landscape.
Trump’s visit also coincided with a policy shift, as the White House relaxed export restrictions on advanced microchips from US firm Nvidia to both the UAE and Saudi Arabia.
This decision emphasizes the United States’ view of its Gulf allies as partners in a broader technological alliance.
The Gulf states are leveraging their sovereign wealth, strategic geography, and energy resources (including significant oil reserves) to position themselves as AI hubs. Technology is crucial to their long-term strategies for diversifying away from fossil fuel revenues.
The UAE is particularly proactive in this area, with data centers forming a cornerstone of its AI strategy. Abu Dhabi has announced plans for a large-scale data center cluster for OpenAI and other US companies as part of the “Stargate” project.
This multi-billion-dollar initiative is funded by G42, a UAE state-linked technology firm driving the country’s AI ambitions, and will utilize Nvidia’s most advanced chips.
Tech industry leaders like Cisco, Oracle, and Japan’s SoftBank are also collaborating with G42 on the project’s initial phase.
“Just as Emirates helped transform the UAE into a global aviation hub, the UAE is now positioned to become a central hub for AI and data,” says Hassan Alnaqbi, CEO of Khazna, the UAE’s largest data center operator.
Khazna, majority-owned by G42, is responsible for building the infrastructure for Stargate and currently operates 29 data centers throughout the UAE.
The UAE and Saudi Arabia aim to host the necessary data centers for training sophisticated AI models. “Compute is the new oil,” states Mohammed Soliman, a senior fellow at the Middle East Institute in Washington, DC.
In the AI context, “compute” refers to the significant processing capabilities enabled by high-end chips and extensive data centers – areas where the Gulf states are investing billions of dollars.
In today’s AI-driven economy, infrastructure serves as the new fuel, much like oil did during the industrial era.
Mr. Soliman suggests that, similar to how Gulf-based oil companies powered the global economy in the past, AI firms in the region now aspire to provide “compute” resources to drive the 21st-century global economy.
Gulf sovereign wealth funds have directed significant capital into foreign tech companies in recent years, but are now transitioning from passive investments to more active participation.
In Saudi Arabia, the Public Investment Fund (PIF) has established a national AI company, Humain, with plans to develop “AI factories” supported by several hundred thousand Nvidia chips over the next five years.
In the UAE, state-owned investment firm Mubadala has supported G42 and MGX—a $100 billion AI-focused joint venture involving Microsoft as a key technology partner—along with other domestic initiatives.
However, attracting highly skilled AI professionals remains a significant hurdle. To address this, the UAE is actively recruiting overseas companies and researchers with incentives such as low taxes, long-term “golden visas,” and streamlined regulations.
“Building world-class digital and AI infrastructure will serve as a magnet,” says Baghdad Gherras, founder of a UAE-based AI start-up and venture investor.
Currently, the region has yet to produce a globally recognized AI firm on par with OpenAI, Mistral, or DeepSeek, and lacks a deep pool of established research talent.
Mr. Gherras cites the UAE’s relatively small population—just over 10 million—as a potential constraint on building a large-scale research ecosystem.
The rise of Gulf states as ambitious AI players has highlighted the US-China tech rivalry in the Middle East.
Trump’s visit provided Washington with a significant advantage in the region’s AI development—though with certain trade-offs. As part of its strategic realignment, the UAE has reduced its involvement in some China-backed projects and lessened its reliance on Huawei hardware.
The emphasis on AI deals during Trump’s visit underscores the increasing strategic importance of technology in US diplomacy.
Traditionally, the US-Gulf relationship has centered on an oil-for-security framework. This dynamic is now evolving to encompass energy, security, and technology.
At the Middle East Institute, Mr. Soliman notes that the AI agreements signed during Trump’s visit “are more about China than about the Gulf.”
“The aim is to integrate a promising, emerging AI region—the Gulf—into the American AI ecosystem, essentially aligning it with ‘Team America AI’,” he explains.
The “AI stack” encompasses the complete range of AI capabilities: chips, infrastructure, models, and software, largely dominated by US companies.
Mr. Gherras suggests that choosing the US over China was a logical decision.
“At this stage, the Americans hold a lead in AI development. It was therefore sensible for the UAE to align with them,” he states.
However, according to a Reuters report, the multi-billion-dollar Stargate project is still undergoing security reviews, as US officials express concerns about potential Chinese personnel or technology involvement in UAE data centers.
Nonetheless, the project is expected to proceed, with backing from US firms.
While the US currently leads in AI, Mr. Soliman advises against underestimating China’s potential.
“They are developing rapidly and already possess a comprehensive AI infrastructure. While it might not be as advanced as America’s, it is more cost-effective. And for many nations, ‘good enough’ is sufficient.”
For the time being, both the US and the Gulf stand to gain from their collaboration.
The US secures allies in its effort to surpass China in AI and compute capabilities, while the Gulf nations gain a strong partner in their pursuit of alternatives to oil revenue.
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