Artificial intelligence (AI) has become a strategic industry, not simply a digital tool. A state’s ability to develop and deploy AI across defense, intelligence, the economy, and public administration is becoming a measure of national power. AI depends on a broader technological ecosystem: compute, semiconductors, cloud services, data centers, energy, talent, capital, and research and development capacity. Together, these form what is known as the AI stack, which increasingly separates countries that mainly adopt AI applications from those able to build, host, and govern the infrastructure behind them. This has sparked what is called an “AI arms race” among states, with the United States and China leading the charge. The intense competition for AI leadership creates a complex web of international relations, where alliances are forged, rivalries intensify, and technological sovereignty is being redefined.
Nowhere is that redefinition being tested more directly than amongst the Arab states of the Gulf. Saudi Arabia, the United Arab Emirates (UAE), and Qatar have each moved to convert their oil wealth into computing power. The bet is that controlling AI infrastructure will do for the next century what oil did for the last one. For these governments, AI is no longer just a private-sector experiment. It now sits in their national strategy, school curricula, and industrial policy, backed by billions of dollars in public investment. This serves two goals at once. In the near term, it hedges against the region’s dependence on oil and gas. In the longer term, the goal is bigger: to emerge as global AI centers that control data, influence norms, and wield technological soft power. The Iran War has already tested that ambition and forced a reassessment of how this infrastructure is built.
A Gulf Arab AI Map
Saudi Arabia’s Vision 2030 set the diversification mandate in 2016 and created the Saudi Data and Artificial Intelligence Authority in 2019. The real acceleration came in 2025, when Crown Prince Mohammed bin Salman launched HUMAIN, a PIF-backed AI company targeting nearly two gigawatts of compute by 2030 and 6.6 gigawatts by 2034, on a roughly $77 billion budget. At LEAP 2026, HUMAIN unveiled a wave of American partnerships in a single week, including an expanded Microsoft deal folding in its Arabic-language model, ALLaM. Other Saudi firms signed parallel deals with Chinese companies, a sign Riyadh is hedging even while leaning toward Washington. The government has declared 2026 its Year of Artificial Intelligence.
The UAE named the world’s first minister of state for AI in 2017 and published its National Strategy for Artificial Intelligence 2031 in 2018. Today, its national AI company, G42, does more than run data centers at home. It finances gigawatt-scale projects abroad, including a billion-dollar digital ecosystem venture in Kenya. Stargate UAE, a joint venture with OpenAI, Nvidia, Cisco, and Oracle, is the first phase of a planned five-gigawatt campus, among the largest outside the U.S. and China. That access has deepened the UAE’s alignment with Washington: G42 divested its Chinese holdings, including Huawei equipment, and now operates under U.S. security monitoring tied to its chip licenses. According to Microsoft , the UAE ranks first in the world in AI adoption. Qatar published a national AI strategy in 2019. Its most significant step came in late 2025 with the launch of Qai, a sovereign AI company backed by the Qatar Investment Authority, and a $20 billion infrastructure partnership with Brookfield Asset Management.
Yet Arab “Gulf ambition” is not a single strategy. Oman has skipped the data-center race. Instead, it bets on chip design and testing, including its own Oman 1 and Oman 2 chips. Bahrain and Kuwait remain more dependent on external hyperscalers. Bahrain hosts the Gulf’s first foreign cloud region, opened by AWS in 2019, rather than building its own. In 2024, it issued only AI guidelines, not a full strategy. Kuwait published its first national AI strategy in 2024, last among the six Gulf states. The strategy focuses more on training people than building infrastructure. In 2025, its sovereign fund joined an AI infrastructure partnership led by Microsoft, the investment firm BlackRock, and the Emirati fund MGX.
If it lives up to its promise, AI could become a genuine driver of growth across MENA: more productivity, new industries, greater resilience against future shocks. However, that outcome depends on governments aligning national AI strategy with a national compute plan that accounts for capacity, effectiveness, and resilience.
Does a country have the capacity to execute its plans? Is that capacity used effectively, translating investment into actual output? And can the system withstand shocks such as chip shortages, energy disruptions, or security crises?
Measured this way, the UAE, Saudi Arabia, and Qatar score well, drawing on sovereign capital, cheap energy, a central geographic location, and real infrastructure on the ground. But effectiveness and resilience are less settled. Talent remains thin, much of it still runs on foreign chips and cloud platforms, and ongoing regional conflict has struck data centers and disrupted Gulf shipping routes, a reminder that resilience cannot be assumed.
Mind the Gap
The gap widens sharply in middle-income countries like Jordan, Algeria, Morocco, Lebanon, Tunisia, Iraq, and Egypt. All acknowledge the importance of AI for the future, with efforts to develop national AI and digital strategies. Egypt established a National Council for AI in 2019 and adopted a National AI Strategy focused on human capacity building and AI-driven development across key sectors. It has since launched a second National AI Strategy for 2025–2030, switching to an infrastructure- and sovereignty-driven strategy. The government targets AI’s contribution to 7.7 percent of GDP by 2030 and positions Cairo as Africa’s AI hub.
Jordan adopted an AI Strategy and Implementation Plan for 2023–2027 to develop AI skills, encourage investment and research, and expand AI use across government and priority economic sectors. Algeria adopted its first national AI strategy in 2024, focusing on research, workforce development, digital infrastructure, startups, and AI applications across key industries. Morocco has incorporated AI into its Digital Morocco 2030 agenda and launched an “AI Made in Morocco 2030” initiative to strengthen domestic research, talent, infrastructure, and locally developed AI capabilities. Morocco has also begun preparing to introduce a new Digital X.0 Law. Tunisia is developing a national AI strategy for 2026–2030 focused on skills, digital infrastructure, public-sector modernization, and technological sovereignty.
However, their compute capacity lags far behind their ambitions. Debt loads, tight budgets, inflation, strained power grids, and unstable politics all limit how much infrastructure these governments can realistically fund, whatever their plans promise. The same pressures are pulling their talent away to Saudi Arabia or the UAE over home.
If AI lives up to its transformative promise, the region’s widening technological divide and developmental inequalities could become self-reinforcing. Today’s disparities in the AI stack could harden into tomorrow’s hierarchy of economic and geopolitical power.
How that plays out will likely depend on both regional states and external powers, as Washington and Beijing compete for strategic advantage and their tech firms for market share.
The AI race
For Washington, the region’s uneven AI landscape presents a strategic opening. The United States still leads on frontier models, advanced chips, and hyperscale clouds. U.S. firms are already central to major Gulf AI projects, giving Washington leverage through chip access and security requirements. But that lead is contested. Chinese firms hold ground in Gulf telecoms, cloud, and data centers. Gulf states hedge accordingly: American compute, Chinese ties, both at once.
At stake is whether this dynamic will narrow or deepen MENA’s AI divide. Washington’s choices matter here. Compute’s value depends on the skills, research, and policy needed to turn hardware into real economic activity. The next stage of MENA’s AI race will ultimately be measured not by how many data centers it builds, but by how much local and regional capability grows around them. For the United States, the strategic opportunity lies in deepening its role in MENA to reinforce its advantage in advanced chips and frontier models while broadening the reach of the U.S. technology ecosystem beyond the Gulf through research, talent development, and commercially viable AI deployment.
One option is to encourage the Gulf’s capital and compute buildout to extend beyond its borders, linking Gulf infrastructure to broader regional capacity-building. That could include expanding access to compute for universities and startups, creating cross-border research partnerships, supporting talent exchanges, and financing applied AI projects in countries such as Egypt, Jordan, Morocco, and Tunisia. If pursued seriously, that ecosystem could help narrow the divide by building an innovation economy in which local talent, infrastructure, and investment support the development of new firms and technologies rather than just adopt what others have made.
What to Watch: The Iran War’s Long Shadow
Whether the disruption proves temporary or structural. The Iran war has paused, not canceled the region’s AI infrastructure outlook, but firms appear to be delaying, not abandoning. Pure DC paused decisions on new data centers after its Abu Dhabi site was struck. CEO Gary Wojtaszek explained that developers are holding off on new builds until the situation stabilizes, but described the region as a long-term priority for the company. Whether that pattern holds, or capital quietly redirects elsewhere, will be the clearer signal, as the war’s costs spread well beyond the data centers themselves.
Whether infrastructure resilience matches ambition. Seven months on, AWS still cannot restore access to its Bahrain facility or one UAE zone, with some data permanently lost and no fix expected before 2027. Stargate UAE is already being redesigned in response, shifting from a single 5-gigawatt campus toward a dispersed network of data centers, including some potentially built underground.