Mideast Titans Pivot Strategically in AI Race Amid US-China Dominance
75min read The narrative that Middle Eastern nations are stepping back from the global AI race is misleading. In reality, Saudi Arabia, the UAE, and other Gulf states are doubling down on artificial intelligence, leveraging their strategic geographic position, energy resources, and capital reserves to position themselves as critical nodes in the AI supply chain. While the U.S. and China dominate AI model innovation, the Mideast is pivoting toward infrastructure, partnerships, and data-centric strategies to avoid being sidelined.
The Middle East’s AI Playbook: Infrastructure and Partnerships
Saudi Arabia’s $14.9 billion AI investment pledge at the 2025 LEAP tech conference underscores its goal to become a global AI hub. Key moves include:
- A $1.5 billion collaboration with U.S. chipmaker Groq to build the world’s largest AI inferencing data center in Dammam, partnered with Aramco Digital.
- A sevenfold expansion of data center capacity, adding 2.2 gigawatts of IT load by 2025, with projects like the Desert Dragon Data Centers in Riyadh and Neom.
- The Saudi Data and Artificial Intelligence Authority (SDAIA) advancing its National Strategy to rank the kingdom among top AI nations by 2030.
The UAE, meanwhile, is embedding AI into governance through initiatives like Smart Dubai, aiming for 25% autonomous transport by 2030. Both nations are prioritizing compute infrastructure to attract global AI firms and offset reliance on U.S. or Chinese models.
Ask Aime: What's the Mideast's AI strategy?
Why the U.S. and China Stay Ahead—and Why the Mideast Matters
While the U.S. retains a 10x compute advantage over China via advanced chips like NVIDIA’s H100, and China’s DeepSeek R1 model undercuts OpenAI’s pricing by 96%, the Mideast’s role is pivotal:
1. Geographic Hub: With its location at the crossroads of Europe, Asia, and Africa, the region is ideal for latency-sensitive AI applications.
2. Energy Advantage: Low-cost renewables and hydrocarbon reserves make it cheaper to power data centers than in California or China.
3. Diplomatic Leverage: By aligning with the U.S. (e.g., Groq partnerships) or China (e.g., Huawei’s surveillance tech), Gulf states gain geopolitical clout.
Risks and Considerations for Investors
- Export Controls: U.S. Tier 2 restrictions on Saudi Arabia limit access to advanced chips, pushing some toward Chinese alternatives.
- Data Sovereignty: Gulf states face scrutiny over partnerships with firms like Huawei, which could compromise data autonomy.
- Talent Gaps: While the region invests in training, elite AI researchers remain concentrated in the U.S. and China.
Investment Opportunities in the Mideast AI Ecosystem
- Data Centers: Firms like Desert Dragon Data Centers and Groq’s Dammam facility offer infrastructure plays.
- AI Partnerships: U.S. chipmakers (e.g., NVIDIA, Intel) and cloud providers (AWS, Azure) expanding in the region.
- State Funds: The Saudi Public Investment Fund (PIF) is pouring $26.7 billion into U.S. tech firms like Lucid and Electronic Arts, signaling a broader AI play.
Conclusion: A Strategic Pivot, Not a Retreat
The Mideast is not stepping back from the AI race—it’s redefining its role. With $135.2 billion in projected AI-driven GDP growth by 2030 and a $14.9 billion investment blitz, Saudi Arabia alone is on track to become a compute powerhouse. The region’s focus on infrastructure, strategic partnerships, and geographic advantages positions it to profit from the U.S.-China rivalry.
Investors should prioritize firms enabling this transformation—data center builders, U.S. chipmakers with Gulf ties, and state-backed funds. While risks like export controls and talent shortages linger, the Mideast’s pivot to AI infrastructure ensures it remains a critical player in the global tech ecosystem. As one analyst put it: “They’re not making AI models—they’re making the playground where the models play.”
The race for AI dominance isn’t just about algorithms—it’s about who controls the compute, the data, and the geography. In 2025, the Mideast is securing its stake in all three.
