On November 3, 2025, Microsoft announced a major expansion of its AI and cloud infrastructure investments in the United Arab Emirates, bringing its total commitment to $15.2 billion between 2023 and 2029. This builds on an AI initiative launched in early 2023 with support from both the US and UAE governments, focusing on technology and talent development.
Notably, this massive sum is not money raised in the UAE but Microsoft’s own investment in the country. Over the past two years, the company has already spent around $7.3 billion, including $1.5 billion for an equity stake in G42, the UAE’s state-backed sovereign AI company, which also granted Microsoft a board seat. Microsoft has also invested $4.6 billion in AI and cloud infrastructure development.
Between 2026 and 2029, Microsoft plans to invest an additional $7.9 billion, including $5.5 billion in capital expenditures for new and expanded data centers in Abu Dhabi and Dubai.
The deal hinges on US government approval to export Nvidia GPUs to the UAE. In September 2025, under the Trump administration and building on Biden-era authorisations, Microsoft received clearance from the US Commerce Department for these exports. The Biden administration had previously allowed Microsoft to deploy the equivalent of 21,500 Nvidia A100 GPUs. With the new approvals, Microsoft became the first company under the Trump administration to secure export licenses to ship GPUs to the UAE, allowing it to deploy an additional 60,400 equivalents, including the cutting-edge GB300 GPUs.
Nevertheless, Microsoft’s mega spending in the UAE, backed by the US administration, is neither charity nor mere market expansion. Many experts believe it is a geopolitical chess move aimed at securing US leadership in the global AI race—especially against China.
The UAE is a strategically positioned country with abundant energy resources, rapid infrastructure development, and strong connectivity to markets across the Middle East and the Global South. All these factors make it highly attractive to the US.
The UAE is now the only non-NATO ally in the Gulf with full US export licenses for cutting-edge AI chips. The deal is widely seen as an effort to create a US-aligned AI hub outside China’s orbit, countering Beijing’s AI ambitions in the region. The advanced GPUs will serve as strategic assets to promote wider adoption of AI models from the US, including those developed by OpenAI, Anthropic, Microsoft, and open-source providers.
However, critics within the US had argued that the deal undermines the rationale behind Washington’s export restrictions on China, since the UAE could potentially serve as a backchannel for Chinese access. In response, the US Commerce Department has issued only entity-specific, end-use-monitored licenses.
This means a chip exported from the US to the UAE cannot be used outside Microsoft’s UAE AI ecosystem. The US hopes such measures will help it maintain its lead in training frontier AI models while denying China access to critical hardware.
Notably, G42—once a Huawei partner with deep Chinese ties—has undergone a major realignment following Microsoft investments. Under US pressure, G42 has reportedly divested from Chinese technology firms, removed Chinese equipment from its data centers, and implemented strict security protocols to secure access to advanced Nvidia H100 chips.
With 59.4 percent of its population using generative AI, the UAE now leads the world in per capita AI adoption. In November 2024, Microsoft announced plans to train one million people in the UAE by the end of 2027. The US seems to be envisioning the UAE as a global talent hub, attracting top professionals from India, Europe, and the MENA region, allowing US firms to tap into a skilled workforce without facing domestic visa bottlenecks.
Many analysts believe these measures are designed to demonstrate that the US can export AI capability without losing control. They also argue that if China had secured G42, it could have dominated AI applications in energy, finance, and defense across the Gulf. Now, the US has effectively consolidated AI dominance over key regional infrastructure. If the UAE model succeeds, it could serve as a template for US strategy elsewhere—including India, which has the potential to become both a major talent hub and a large consumer base for American AI companies.
