By Utkarsh Shetti and Federico Maccioni
DUBAI, Dec 17 (Reuters) – Qatar is banking on its abundant, low-cost energy to make up for lost time in the Gulf’s artificial intelligence race, hoping that cheap power and deep pockets will help it catch up with regional rivals that have already secured a head start.
The launch of Qai, backed by the country’s $526 billion sovereign wealth fund and a $20 billion joint venture with Brookfield, marks Qatar’s most ambitious move yet into a sector that is reshaping global technology and economics.
It joins massive investments in Saudi Arabia, and Abu Dhabi and Dubai in the United Arab Emirates, as part of the region’s broader efforts to diversify away from oil revenues.
But while energy advantage is a powerful lure for hyperscalers – the cloud giants such as Google, Microsoft and Meta driving AI adoption – analysts say the Gulf’s ambitions face structural hurdles that go beyond infrastructure.
OBSTACLES
To become significant players in AI, Gulf states must navigate a thicket of challenges: replicating Western-style data governance, securing scarce advanced chips under U.S. export controls, and attracting top-tier talent in a fiercely competitive global market.
These factors, rather than capital alone, will determine whether the region can translate its financial firepower into meaningful influence in the AI ecosystem.
“The key component there we believe would be Qatar’s ability to emulate the American policy on data privacy laws … when you look around the world at the moment, the single biggest hindrance to significant AI deployment is the regulatory piece,” said Stephen Beard, global head of data centres at Knight Frank.
Qatar has disclosed few details about Qai, but its timing reflects surging demand for AI infrastructure as companies bet on the technology to drive efficiency and cut costs.
“The compute demand is so massive that any new infrastructure buildout in an energy-abundant Qatar that fronts financing is welcomed news for American hyperscalers … In this phase of the AI buildout, there’s room for multiple players,” said Mohammed Soliman, senior fellow at the Middle East Institute in Washington.
However, analysts warn that capturing hyperscaler demand will require sustained investment and policy alignment over many years.
“We expect $800 billion to be spent on the AI data centre buildout in the Middle East over the next two years,” said Dan Ives, analyst at Wedbush.
CHEAPER ELECTRICITY
Qatar’s competitive edge lies in its low-cost electricity, which could offset the region’s high cooling costs in a desert climate. Emirates NBD notes Middle East PUE ratings – a measure of data centre energy efficiency – average 1.79 versus 1.56 globally.
