United Arab Emirates: Fueling AI Aspirations with Capital
A Beyond the US-China Binary country profile
The UAE’s AI Strategy
When it comes to AI, the United Arab Emirates (UAE) is sparing no expense. The federation has already poured USD $148B into AI development since 2024 and plans to aggressively integrate AI into its federal governance processes. In 2017, the UAE launched its Strategy for Artificial Intelligence 2031, becoming the first country to appoint a Minister of Artificial Intelligence in the process. The strategy maps the UAE’s goal of becoming a “global leader” in AI by 2031 through eight objectives, including building the UAE’s reputation as an AI destination, increasing competitive assets in priority sectors within the AI development chain, and developing its AI ecosystem. The UAE’s overall AI market has already grown substantially, projected to reach $46.33 billion by 2030, from just $3.47 billion in 2023-2024.
Abu Dhabi, one of the seven emirates of the UAE, is the core of the federation’s AI ambitions. In January 2025, the Abu Dhabi Executive Council approved the Government Digital Strategy 2025-2027, committing AED 13 billion (USD $3.54 billion) and an ambition to become the world’s first fully AI-powered government by 2027. The document claims that the emirate can achieve “100% AI integration” across all Abu Dhabi government digital services, the “complete automation” of government processes, and the adoption of sovereign cloud computing.
The UAE has shortened its federal strategic planning cycle from five years to three years, as one of several moves towards a more agile governance model. It also plans to mainstream AI-powered predictive modeling and performance metrics throughout the federal government. In September 2024, the UAE launched an “AI Principles and Ethics” framework with eight guiding principles: fairness, accountability, transparency, explainability, resilience, safety, human values, and sustainability.
What the UAE Offers
The UAE’s competitive advantages lie in exceptional financial resources, strategic infrastructure investments, and institutional innovation.
Total Emirati AI investment reaches many tens to possibly low hundreds of billions of dollars, though precise figures are not publicly disclosed. In March 2024, Abu Dhabi’s sovereign wealth fund Mubadala, G42, and the UAE state-backed Artificial Intelligence and Advanced Technology Council announced the creation of MGX, an AI investment vehicle expected to reach $100 billion in assets. In September 2024, MGX, together with BlackRock, Global Infrastructure Partners, and Microsoft, launched a global AI infrastructure fund. In early 2025, MGX became one of four initial equity funders for OpenAI’s Stargate Project, which plans to invest $500 billion in US AI infrastructure over four years. Most recently, MGX participated in a $6.6 billion secondary share sale in OpenAI, marking one of the largest private transactions in the AI sector this year. Meanwhile, ATIC Third International Investment Co., an enterprise aligned with Mubadala, holds a sizeable ownership stake in Anthropic. Mubadala also owns GlobalFoundries, the third-largest semiconductor foundry by revenue in 2023, which sees increasing demand for its products to support embodied AI. These ownerships can translate into access to outsized financial returns from economically transformative AI, as well as potential influence over impactful strategic and governance decisions.
Infrastructure is another edge, backed by the UAE’s data center investment and energy advantages. The UAE has invested strategically in data center capacity, with upcoming capacity projected to exceed 1.4 GW, representing more than 3x growth and a significant regional share. More than $10 billion in new investments is expected to flow into the UAE’s data center sector by 2027. Abu Dhabi dominates the upcoming data center market, accounting for nearly 45% of planned capacity. The UAE data center market is projected to grow at a Compound Annual Growth Rate (CAGR) of 17.64% from 2024 to 2030, reaching $3.33 billion by 2030. Furthermore, the UAE possesses energy advantages for AI infrastructure. The Barakah nuclear power plant was completed faster than comparable US projects. According to industry projections, the UAE’s total power capacity is expected to reach 79.1 gigawatts by 2035, with current capacity already providing substantial energy resources for AI operations. The country has simultaneously invested in renewable energy infrastructure, including Abu Dhabi-based clean energy company Masdar’s unprecedented facility.
The UAE’s offerings extend beyond investment and infrastructure to building regional soft power through advanced, open-source AI models, aiming to fill a critical linguistic and technological gap in the Middle East. The UAE-developed large language model, Falcon, is noteworthy for its technical characteristics and geopolitical utility in the Arab world. Offered under an open-source license, Falcon allows regional developers and governments to access and adapt the underlying AI technology without dependence on US or Chinese corporations. More importantly, Falcon’s specialized Arabic version addresses the significant linguistic deficit in existing frontier models, which are predominantly trained on English or Chinese data. The UAE has also committed itself to various South-South AI capacity building partnerships, including by investing in a green data-centre in Kenya and partnering with Malaysia and Rwanda to accelerate the responsible adoption of emerging technologies. However, the UAE still has a long way to go if it aspires to outspend China in aid diplomacy and technology capacity-building efforts.
What the UAE Wants from the World
Despite these resources, the UAE faces dependencies that shape its international engagement priorities. The UAE requires continued access to cutting-edge AI chips, particularly NVIDIA’s advanced GPUs. US export controls on high-end chips remain a contentious issue. In 2024, the US House Select Committee on Strategic Competition investigated G42’s potential ties to China and proposed adding G42, a leading AI firm backed by the UAE government, and 13 connected companies, to the US Bureau of Industry and Security (BIS) entity list. Under the US Biden Administration’s Framework for AI Diffusion, the UAE would have faced restrictive access to high-end US chips; these restrictions have since been removed, but direct chip access remains uncertain. In July 2025, Trump administration officials reportedly stalled efforts to finalize a chip deal with the UAE.
The UAE’s pursuit of significant investment to fuel domestic AI adoption is evidenced by its approach to strategic international partnerships. Official plans explicitly outline its desire to transition from a hydrocarbon economy, with AI contributing up to 20% of non-oil GDP by 2031. To realize this goal, the UAE leans on partnerships with global technology giants to drive the development and the deployment of AI. Microsoft’s $1.5 billion investment in G42 came with assurances to both US and UAE governments on secure and responsible AI development. However, this partnership required G42 to divest from Chinese technology investments and reduce its China presence. The UAE continues to court technology partnerships with American firms, including OpenAI, Oracle, NVIDIA, and Amazon Web Services, while navigating US national security concerns.
The UAE’s rapid ascent in AI is fundamentally dependent on imported talent, built upon the government’s proactive approaches including low taxes, long-term “golden visas“, and lighter regulation. This reliance is visible at the Mohamed bin Zayed University of Artificial Intelligence (MBZUAI), the world’s first graduate-level AI research university. MBZUAI relies heavily on international faculty to staff its research programs, with faculty members who include a significant cohort of Chinese researchers.
US-China Alignment
The UAE has made a clear strategic pivot toward alignment with the United States on AI development while maintaining limited economic engagement with China. This positioning reflects calculated assessments of technological dependencies, security partnerships, and long-term strategic interests. Microsoft’s $1.5 billion investment in G42, OpenAI’s partnership, and MGX’s participation in the Stargate Project demonstrate deep integration with US AI ecosystems. The government-led US-UAE AI Acceleration Partnership includes the US facilitating a 1GW AI data center in the UAE and reciprocal inward investments into the US by UAE Investment Funds.
However, as evidenced by the G42 chip access challenges, the UAE must demonstrate commitment to US technology standards and governance frameworks to maintain access to the latest AI capabilities. The UAE has significantly reduced AI-related engagement with China following US pressure. G42’s divestment from ByteDance and JD.com, along with broader reductions in Chinese technology partnerships across Emirati AI companies, is intended to signal prioritization of US relationships over Chinese access.
In non-AI sectors, the UAE’s economic ties to China remain significant. The UAE is China’s largest business incubator and trade partner, and a key node of the Belt and Road initiative. These commercial ties are renewed and strengthened through platforms like the Shanghai Forum, which aims to deepen the UAE-China investment fund to support Chinese enterprise expansion in the Middle East. Reciprocally, China is the UAE’s top non-oil trading partner and source of surveillance technologies.
The UAE’s approach to the new era of AI diplomacy reflects attempted management of great power competition, maximizing US technology access while preserving economic flexibility in areas less critical to national AI strategy. This is among the reasons why many US institutions still regard the UAE as a “swing state” in US-China relations – and a player that could one day rival the US’s AI dominance. Time will tell whether the UAE’s capital-driven ascendancy will deliver on predicted returns. But in the AI arena, the UAE is already far from a dependent client.
Note: This living set of country profiles is intended to be an accessible resource for policymakers, academics, and industry professionals, and all others seeking to understand the international relations of the technology transforming our virtual feeds and physical environments. It reflects the state of affairs at the time of writing (December 2025).
Authors: Sydney Reis*, Zilan Qian*, Karuna Nandkumar*, Kayla Blomquist+, Sam Hogg, Sumaya Nur Adan, Julia Pamilih, Jonas Balkus, Renan Araujo, Songruowen Ma, Tiffany Chan1
*Denotes primary authors who contributed most significantly to the content of the paper. +Denotes authors who contributed most significantly to the framing and direction of the paper. We are grateful to Caroline Jeanmaire, Clint Yoo, Huw Roberts, Joël Christoph, Luis Enrique Urtubey De Cesaris, Nikhil Mulani, Saad Siddiqui, Sharinee Jagtiani, and Zar Motik Adisuryo for their valuable feedback on this project. Authorship of this project indicates contribution but does not imply full agreement with every claim.