Saudi Arabia and the UAE are leading the boom in data center investments in the Gulf

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From the race to develop artificial intelligence to the race to build the infrastructure capable of operating it, the Gulf countries, led by Saudi Arabia and the UAE, are turning into a major destination for global investments in data centers, amid expectations of unprecedented growth in computing capabilities in the coming years.

In a report by S&P Global, the agency expected that the capacity of data centers in the Gulf Cooperation Council countries would triple, to exceed three gigawatts, during the next five years, driven by the expansion of artificial intelligence and cloud computing applications.

Saudi Arabia stands out at the heart of this transformation, as the report revealed that the capacity of data centers in the Kingdom increased more than six-fold, from 68 megawatts in 2021, to more than 467 megawatts by the first quarter of this year.

The total investments in data centers and digital infrastructure in the Kingdom amounted to about 56 billion riyals during the same period, a reflection of the accelerated implementation of the goals of Vision 2030 and the national strategy for data and artificial intelligence.

Saudi ambitions did not stop there, as “Human” and “DataVolt” began developing an artificial intelligence data center with a capacity of 100 megawatts in “Oxagon” within the first phase of a huge complex developed by “DataVolt” with a total targeted capacity of 1.5 gigawatts, with the initial capabilities starting to enter service in 2028.

At the regional level, the agency estimated that Saudi Arabia and the UAE combined will account for more than 80% of the expected additions to the capacity of data centers in the Middle East until 2030.

But this boom is not without challenges. Standard & Poor's has warned of the growing impact of geopolitical risks on data center projects, stressing the importance of securing electricity supplies and cooling systems, diversifying locations and enhancing infrastructure flexibility.

The agency stressed that the success of these investments will not only depend on the size of the announced projects, but also on the ability to actually implement them and secure long-term contracts with clients who enjoy strong financial solvency, thus enhancing their economic feasibility and their chances of obtaining financing.

Between the billion-dollar investments and technical ambitions, it seems that the coming competition will not only be over who owns artificial intelligence, but also over who has the infrastructure capable of operating it.