America Is Leading the Middle East's AI Race, but China Is Not Giving Up

Billions of dollars in American technology commitments have strengthened Washington's position in the Gulf, but China's established technology relationships and the region's push for greater technological independence are complicating the competition.

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Saudi Arabia and the United Arab Emirates are investing heavily in data centers, advanced computing and locally developed artificial intelligence systems. Their plans have attracted some of the world's largest technology companies, making the Gulf an increasingly important market in the competition between the United States and China.

American companies currently have the advantage in advanced computing infrastructure. Nvidia, cloud services and partnerships with regional AI companies underpin some of the Gulf's largest projects. Chinese companies, meanwhile, have established positions in telecommunications and cloud computing and are seeking a larger role in AI models and enterprise services.

Neither Saudi Arabia nor the UAE is relying on a single foreign technology partner. Both are pursuing access to international technology while investing in domestic companies and computing capacity. Their choices reflect commercial priorities, security requirements and the conditions attached to access to advanced American technology.

American companies have secured the infrastructure advantage

Access to advanced chips has become a central factor in the Gulf's largest computing projects. On November 19, 2025, the US Department of Commerce authorized Saudi Arabia's HUMAIN and UAE-based G42 to purchase the equivalent of up to 35,000 Nvidia Blackwell GB300 chips each. Both approvals came with security and reporting requirements.

A change to US export rules took effect on July 10, 2026. It allows UAE government agencies to receive eligible advanced computing products without individual export licenses. The approval does not cover state-owned corporations or government contractors. G42 and its cloud subsidiary Core42 have separate authorization as approved recipients, due to expire on April 6, 2027, unless the US government extends it.

The UAE's Stargate UAE project is among the largest planned developments to emerge from this cooperation. Announced in May 2025 by G42, OpenAI, Oracle, Nvidia, SoftBank and Cisco, it is a planned 1GW computing cluster within a 5GW UAE-US AI campus in Abu Dhabi. The first 200MW is targeted for customer handover in the fourth quarter of 2026. Khazna Data Centers said in September that construction was progressing toward that schedule, but the facility had not been confirmed as operational by November 5.

Saudi Arabia is expanding its own computing capacity through HUMAIN, the Public Investment Fund-backed company developing data centers, high-performance computing, cloud platforms and AI models.

American AI providers are also moving into major Gulf businesses. On November 2, 2026, ADNOC announced a multi-year partnership with OpenAI and G42 to deploy OpenAI Frontier on G42's UAE-based computing infrastructure. ADNOC has already rolled out ChatGPT Enterprise to more than 40,000 employees. The new agreement extends OpenAI's involvement into the operations of one of the region's largest energy companies.

China is building on relationships it already has

Chinese technology companies have spent years establishing a presence in the Middle East, particularly in telecommunications and cloud computing. Huawei launched its Riyadh cloud region in September 2023. Alibaba Cloud, which entered the Dubai market with its first data center in 2016, opened a second facility in the city in October 2025, expanding its local capacity for cloud computing, data storage and AI services.

Chinese-developed AI technology is also being used in regional projects that rely on American computing hardware. In June 2026, the International Institute for Strategic Studies cited MBZUAI's K2 Think reasoning model as an example. Developed in partnership with G42 and American computing company Cerebras, the model uses Alibaba's open-source Qwen architecture. Its development brings Chinese AI technology into a project built around a mix of regional and American partners.

G42's relationship with Chinese technology providers changed after its 2024 partnership with Microsoft. Under the conditions attached to Microsoft's $1.5 billion investment, G42 agreed to divest from partnerships with Huawei and other Chinese technology companies. Saudi Arabia has taken a different approach. Huawei's role in the Kingdom's 5G infrastructure through STC remains in place as Saudi Arabia expands its relationships with American companies.

Chinese AI developers are also gaining access to Saudi Arabia's plans for locally developed models. In September 2026, HUMAIN introduced humain-m3, an Arabic-language model commissioned by the Saudi company and delivered by China's MiniMax. The arrangement gives a Chinese developer a direct role in Saudi Arabia's efforts to build its own AI capabilities.

The UAE is taking a different route through institutions such as the Institute of Foundation Models at Mohamed bin Zayed University of Artificial Intelligence, which is developing locally built models.

The difference between the two countries is becoming clearer. Saudi Arabia continues to work with Chinese technology companies in selected areas, while the UAE has reshaped G42's supplier relationships as it deepens cooperation with American partners.

The infrastructure challenge goes beyond investment

The Gulf's expansion plans face a practical test. Announced computing capacity is not the same as operational capacity. Data centers need reliable electricity, cooling, water and enough customers to justify the cost of construction and operation.

Saudi Arabia's investment in HUMAIN gives an indication of the scale of its ambitions. On November 1, 2026, Aramcoand the Public Investment Fund completed a transaction giving Aramco a 49% stake in the company, with PIF retaining 51%. Aramco is contributing SAR 9.9 billion, or about $2.6 billion, in cash during 2026, alongside AI, computing and digital assets. HUMAIN aims to deploy 3GW of AI data center capacity by 2030.

JLL 's EMEA Data Centre Mid-Year 2026 report, published on August 3, estimated that the Middle East had 1.6GW of live data center capacity, with another 2.6GW in development and 13.8GW in the planning pipeline. The firm said regional conflict had stalled major completions over the preceding six months, although projects had been deferred rather than cancelled. Much of the capacity being discussed across the region remains at the planning stage.

The commercial case will depend on whether demand grows quickly enough to support that expansion. Government agencies, energy companies, financial institutions and international customers will need to purchase sufficient computing services to justify the facilities under construction. Power and cooling requirements add further pressure, particularly as projects move from announcements to operation.

The United States has secured a strong position in the Gulf's advanced computing projects, while Chinese companies remain active in telecommunications, cloud services and regional AI development. The competition is not simply a contest between foreign suppliers. Saudi Arabia and the UAE are investing in companies, infrastructure and models of their own, giving them a growing role in deciding which outside partners gain access to their markets.

As those domestic capabilities develop, American and Chinese companies will have to compete for a place in technology industries that Gulf governments increasingly intend to shape themselves.

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