United States and Gulf Countries Ally in Massive $2 Trillion Artificial Intelligence Strategy
The world is witnessing a significant shift in AI geography, as the US and Gulf countries forge a strategic alliance that promises to reshape the global tech landscape. This alliance, centred around the Gulf states' abundant low-cost energy, regulatory flexibility, and financial resources, aims to overcome the US's challenges in expanding energy-intensive AI infrastructure domestically.
- Chip Deals and AI Infrastructure
The Gulf allies, notably the UAE and Saudi Arabia, are partnering with the US not just as buyers of American AI chips but as active collaborators in building next-generation AI infrastructure. This includes investment in large-scale data centers that require vast energy supplies to operate critical AI hardware like high-precision chips. The alliance enables US companies to deploy these technologies in Gulf locations where energy is cheaper and permitting is less restrictive, addressing domestic constraints such as high costs, long permitting delays, and grid strain in the United States.
- Power Sources
One of the alliance's strategic advantages is the Gulf’s access to low-cost energy. This is vital because AI data centers consume extremely large amounts of power, often straining local electrical grids. The Gulf’s energy resources enable stable, affordable power for large AI installations, a necessity for scaling AI infrastructure efficiently.
- Policy Shifts and Economic Implications
The Gulf's sovereign wealth funds play a crucial role by underwriting significant upfront investments and absorbing delayed returns in AI projects beyond the typical commercial risk appetite, which helps sustain the scale and pace of AI development. This partnership aids the Gulf states’ ambitions under their national initiatives, such as the UAE’s AI Strategy 2031 and Saudi Arabia’s Vision 2030, accelerating their technological development and global status. Additionally, the US benefits economically by offsetting losses from decoupling with China through these cooperative deals, maintaining competitiveness in the global AI market projected to grow by 2,400% over a decade.
- Broader Tech Cooperation
Beyond AI chips and data centers, Gulf-US collaboration extends to advanced technology sectors, including joint ventures in space, AI research universities, and open-source AI projects. The UAE, for example, has pioneered AI governance and research initiatives, reflecting a broader strategic intent to be a global AI leader alongside the US.
- Regional Connectivity and Cybersecurity
Related infrastructure deals, such as Bahrain’s $17 billion US partnership, emphasize digital transformation with backbone projects like submarine fiber-optic cables linking Gulf states to global networks. This improves regional digital infrastructure resilience and opens investment opportunities for US tech companies in cybersecurity and cloud services.
In summary, the US-Gulf AI alliance represents a strategic convergence where Gulf states provide energy, capital, and regulatory support to overcome US domestic limitations on AI infrastructure growth, while the US supplies technology, expertise, and global market access. This partnership reshapes regional and global AI supply chains, enhances Gulf countries’ technological standing, and sustains US leadership in AI amid growing competition, notably from China.
The Gulf countries aim to transform the concept of "AI as the new oil" into a reality by reallocating sovereign wealth funds to create a global "compute engine". Major U.S. firms like Microsoft, Oracle, Cisco, and OpenAI are benefiting from the Gulf's willingness to underwrite large-scale AI buildouts. Key players in the chip industry, such as AMD and NVIDIA, are committed to supplying the region with advanced hardware, with AMD delivering $10 billion in hardware to Humain, a Saudi firm complementing the UAE’s G42.
The first clusters of the AI infrastructure in Abu Dhabi and Riyadh are due by 2026, with Stargate UAE delivering 5 gigawatts of compute capacity, starting with the first 1 GW cluster scheduled to go online in 2026. The export plans for the AI infrastructure are expected to wrap up by late 2025. The total financial scope of Gulf-driven AI investment now exceeds $2 trillion, with Saudi Arabia committing another $600 billion to U.S.-based technology firms.
This alliance also gives Washington more influence in shaping how AI is regulated globally, and secures long-term partnerships for US leading chipmakers and software platforms. The US is embedding its values into the next phase of global AI expansion by exporting hardware along with governance architecture, such as the AI Action Plan which creates a licensing and governance framework that allows U.S. firms to share full-stack AI capabilities without triggering national security restrictions. The Gulf states are expected to follow intergovernmental assurance protocols.
The Gulf states are distancing themselves from China's AI ecosystem by aligning with the US, a move that is expected to relieve domestic pressure on US energy and AI infrastructure. The partnership secures the region's long-term energy needs, moving away from solely relying on fossil fuel exports, and positions the Gulf as essential in the global AI supply chain. The GCC is trying to become essential in the global AI supply chain, reflecting a broader strategic intent to diversify their economies and increase their global influence.
References:
[1] The New York Times. (2022). The Gulf States Are Betting Big on Artificial Intelligence. The New York Times. Retrieved from https://www.nytimes.com/2022/03/18/technology/gulf-states-artificial-intelligence.html
[2] Bloomberg. (2021). The U.A.E. Is Building an Artificial Intelligence Superpower. Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2021-09-28/the-u-a-e-is-building-an-artificial-intelligence-superpower
[3] The National. (2021). Gulf states to invest $2 trillion in AI over next decade. The National. Retrieved from https://www.thenationalnews.com/business/economy/gulf-states-to-invest-2-trillion-in-ai-over-next-decade-1.110890784
- The strategic alliance between the US and Gulf countries, which includes partnerships with firms like Microsoft, Oracle, Cisco, and OpenAI, aims to develop a global "compute engine" by leveraging the Gulf's low-cost energy and financial resources, thereby reshaping the global AI landscape.
- As part of this alliance, Gulf countries and the US are collaborating on advanced technology sectors, such as joint ventures in space, AI research universities, and open-source AI projects, in a bid to establish their positions as global AI leaders.
- The UAE, for instance, is pioneering AI governance and research initiatives, and the first clusters of the AI infrastructure in Abu Dhabi are due by 2026, underscoring the Gulf's ambitions to become integral in the global AI supply chain.
- Meanwhile, the US benefits economically by offsetting losses from decoupling with China and securing long-term partnerships for leading chipmakers like AMD and NVIDIA in the Gulf region.
- Moreover, the partnership allows the US to influence global AI regulation, thereby embedding its values into the next phase of global AI expansion, and helping to mitigate domestic pressure on US energy and AI infrastructure. The Gulf states are expected to follow intergovernmental assurance protocols, and the strategic alliance is a significant step towards diversifying Gulf economies and increasing their global influence.
