The Gulf Coast is looking for “new oil” so they make a big bet on AI

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

The President of the United States was given a royal welcome, but the real highlight of the visit was the announcement of a vast new AI campus, namely the joint initiative of the UAE-US.

It is billed as the largest AI infrastructure hub outside the US and symbolizes the boldest bids of the Gulf Coast, not planted in the heart of the global AI map.

Trump's visit to the Gulf Coast was also consistent with strategic changes, with the White House easing exports of the most powerful microchips from Nvidia in the US to both the UAE and Saudi Arabia.

The move highlights how much the US currently views Gulf allies as partners in the broader technological alliance.

The Gulf countries deploy the edge of their sovereign wealth, geography and energy (a lot of oil) to position themselves as AI hubs. Technology is central to plans to reduce future reliance on revenues from fossil fuels.

In particular, the UAE is leading the charges. And the data center is at the heart of this effort. As part of the “Stargate” project, Abu Dhabi has announced a large data center cluster for Openai and other US businesses.

The multi-billion dollar deal is funded by G42, a UE-related technology company that drives the country's AI ambitions. Nvidia offers the most advanced tips.

Tech giants Cisco and Oracle are working with Japan's SoftBank to build their first phase in collaboration with the G42.

“Just like Emirates helped transform the UAE into a global hub for air travel, the UAE is now in the stage of becoming an AI and data hub,” said Hassan Alnaqbi, CEO of Khazna, the UAE's largest data center operator.

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

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

In the context of AI, computing refers to the vast processing power enabled by high-end chips and large data centers. This is the kind the Gulf is currently investing billions to build.

In today's AI-driven world, infrastructure is a new fuel – just like oil was in the industrial era.

Just as Gulf-based oil companies drove the world economy in the last century, AI companies in the region now want to provide “calculation” to the global economy on the 21st.

Gulf sovereign funds have in recent years put billions into foreign tech giants. But now they are competing from passive investors to more active players.

In Saudi Arabia, the Public Investment Fund (PIF) has launched a national AI company, Humain, which plans to build an AI factory with hundreds of thousands of Nvidia chips over the next five years.

In the UAE, state-owned investment company Mbadara supported G42 and MGX. This has helped Microsoft as a leading technology provider and support the G42 and MGX as other homemade initiatives.

However, attracting highly skilled AI talent remains an important issue. To address this, the UAE is pleading with foreign companies and researchers with low taxes, long-term “golden visas” and lightweight regulations.

“Building world-class digital and AI infrastructures acts as magnets,” says Baghdad Gherras, founder of AI startups and venture investors based in the UAE.

Currently, the region does not yet produce globally recognized AI companies such as Openai, Mistral, and Deepseek, but there is still no benches of deep world-class research talent.

Gherras points to the small population (just over 10 million) of the UAE as a limiting factor for building a large-scale research ecosystem.

The advent of the Gulf countries as ambitious AI players has brought US-China technological rivalry to the desert's forefront.

Trump's visit gave Washington a strong lead in the region's AI race, but was killed. As part of its strategic pivot, the UAE has reduced several China-backed projects and reduced its reliance on Huawei hardware.

The emphasis on AI trading during Trump's visit highlights the growing strategic importance of technology to US diplomacy.

Traditionally, the US-Gulf relationship has focused on security oils. But dynamics are now shifting towards energy, security and technology.

At the Middle East Institute, Soliman said the AI deal signed during Trump's visit “is more about China than the Gulf.”

“Essentially, we are trying to bring the promising, rising AI region, which is the Gulf, into the American AI stack.

“AI stack” refers to a complete pipeline of AI functions. Chips, infrastructure, models, software – primarily dominated by US companies.

Gherras says choosing the US over China is a reasonable choice.

“At this stage, Americans are ahead of the AI games, so it makes sense for the UAE to bet on them,” he says.

However, a multi-billion-dollar Stargate deal remains awaiting security clearance, as U.S. officials are concerned about potential Chinese personnel or technology involved in UAE data centers.

Nevertheless, the project is expected to move on, with American companies gathering behind it.

But while the US is currently leading in AI, Soliman warns against China's underestimation.

“They're scaling fast. They already have an AI stack. It may not be as strong as the American one, but it may be cheaper. And in many countries, enough is enough.”

But for now, both the US and the Gulf can benefit from their cooperation.

The US has gained allies in its quest to emphasize and calculate Chinese people in the field of AI – Gulf countries will gain strong partners in search of alternatives to oil revenues.