The Middle East is outpacing Europe in AI and tech investment, with government-backed funding, global partnerships, and major digital infrastructure projects.

While Europe has long been a foundational market for enterprise technology, a new, dynamic centre is emerging. Driven by unprecedented, government-backed investment, the Middle East is rapidly surpassing traditional markets in AI adoption and infrastructure development, positioning itself as a leader in the global tech race.

Drawing on the latest enterprise server market data from CONTEXT, a compelling picture emerges. In the United Arab Emirates, Saudi Arabia, and Qatar, the share of AI-capable servers reached approximately 13% in August 2025, with peaks as high as 18% in other months. This figure is notably higher than the 10% share currently seen in Europe, which is widely considered a mature market. This trend is not a fleeting anomaly, but rather a reflection of a concerted, long-term strategy. The World Bank projects Middle East economic growth of 3.2% in 2025 and 4.5% in 2026, largely driven by non-oil sectors. This economic diversification, funded by an oil surplus in 2025 and 2026, is fuelling massive investments in digital infrastructure.

The drivers of AI dominance

The Middle East’s rise as a technology powerhouse is rooted in strategic, high-level commitments. Recent visits by US government and corporate delegations have resulted in significant economic pledges. Saudi Arabia committed $600 billion in US investment, while Qatar pledged a staggering $1.2 trillion. The UAE accelerated a previous $1.4 trillion commitment with $200 billion in new commercial deals. While these are headline figures, they are being rapidly translated into concrete, multi-billion-dollar technology projects.

Major tech giants are already cementing their presence in the region:

• Oracle is opening a new cloud region in Riyadh as part of a $14 billion investment in Saudi Arabia.
• Microsoft has partnered with UAE-based G42 to build a large-scale AI supercomputer.
• NVIDIA and AMD signed agreements with Humain to supply hundreds of thousands of chips for a one-gigawatt AI data centre.
• Quantinuum, a US company, agreed to a $1 billion joint venture with Qatar-based Al Rabban Capital for quantum technologies.

These projects represent a strategic push to position the Middle East at the forefront of AI development. Saudi Arabia, for instance, is currently ranked 14th overall in the global AI index but holds the top spot for government strategy. This strong governmental focus is a key differentiator, creating a clear and direct path for technology adoption that can bypass the bureaucratic hurdles often found in other regions.

A new geopolitical reality

This wave of investment also carries significant geopolitical weight. The agreements demonstrate that these Middle Eastern countries are actively courting partnerships with Western technology leaders, despite the UAE’s membership in BRICS, an organisation originally formed to counter Western economic influence. This “East meets West” approach challenges the traditional binary of technology alliances, creating a unique, hybrid ecosystem where vendors can operate without having to pick a side.

The US, for its part, is leveraging a “tariffs for deals” policy. Countries that engage in large-scale investments and partnerships with the US are rewarded with lower tariffs, such as the 10% tariff applied to the Middle East, compared to higher rates for countries like Canada (35%), Türkiye (15%), and Japan (15%). This strategic use of trade policy accelerates the flow of technology and capital into the region, reinforcing the Middle East’s position as a preferred partner for the US in critical sectors like AI and defence.

Looking ahead

The convergence of ambitious government strategies, immense financial resources, and a strategic geopolitical position is creating a powerful new hub for technology development. As enterprise server sales data continues to show positive growth in the region, with Saudi Arabia, for example, bouncing back with 67% growth in August 2025, the early returns on these investments are already visible.

The Middle East’s ability to attract both Eastern and Western companies, coupled with its top-down, government-driven approach, positions it to move swiftly up the global AI index. The region is quickly becoming a central player in the development and deployment of technology. For tech companies and investors alike, the Middle East is no longer a peripheral market, but a central, strategic hub for the future of AI.

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