Gulf’s $250 billion computing race collides with water dilemma and revenue drain abroad
The pace of building computing and artificial-intelligence infrastructure in the Gulf states is accelerating, with pledged investments exceeding $250 billion, as a strategic effort to reduce reliance on oil revenues and diversify national economies. Yet this expansion, expected to raise the region’s data-center capacity from one gigawatt in 2025 to 3.3 gigawatts by 2030, puts the ambitious plans to the test of complex physical and operational challenges that exceed the announced financial flows.
The regional race is driven by three main tracks: Saudi Arabia is advancing through the “Project Transcendence” initiative launched in 2024 with a $100 billion budget, followed by the establishment of the Public Investment Fund in May 2025 for the company HUMAIN, aiming to reach 1.9 gigawatts by 2030 and between 6 and 6.6 gigawatts by 2034. In Qatar, the company Qai was founded in December 2025 under the Qatar Investment Authority as part of a $20 billion infrastructure partnership, later signing a partnership with the company Miza to deploy advanced graphics-processor hardware.
In the United Arab Emirates, the joint “StarGate” project between G42 and international technology partners is undergoing a fundamental redesign of its engineering architecture; the plan that began as a single data-center with a five-gigawatt capacity in Abu Dhabi,is being redistributed into a network of geographically distributed centerswith enhanced protection against drone and missile attacks, following the targeting of Amazon facilities in the UAE and Bahrain in March and subsequent Iranian warnings in April that considered the facility a potential target.
Beyond the security tensions, these facilities encounter harsh environmental limits imposed by the region’s geography. Large data centers consume up to five million gallons of water per day for cooling, a heavy burden in an environment that suffers severe water scarcity and relies primarily on energy-intensive seawater-desalination plants, which raises cooling costs and doubles pressure on electricity grids during summer peak periods.
The deepest economic dilemma, accordingThe deepest economic dilemma, according to our analysis in the Bloomberri Institute for Intelligence and Security report, lies in global supply chains. Even though there is financial solvency,The Gulf computing sector remains entirely dependent on imported hardware and technologies.Control rests in the hands of a few Western providers of semiconductors and cloud licenses, creating a continuous financial leakage that returns a large portion of revenue abroad. Western export controls also impose strict obligations that may push countries such as the United Arab Emirates and Saudi Arabia to strategically disengage from Chinese partnerships to ensure the continued flow of advanced American chips.
Domestically, institutions face the burden of generative model hallucinations and a shortage of specialised expertise, which forces them to rely on recruiting foreign talent alongside local training programmes, as well as allocating teams to review outputs both automatically and manually to avoid costly operational errors. The picture is completed by the fragility of submarine fiber-optic cables and data-transport routes, which become priority targets in regional conflicts and organized cyber-attacks.
This reality reshuffles the operational priorities of technical teams in the Gulf, Egypt and the region as a whole: local compute capacity will not be a surplus, cheap service, but will bear additional costs linked to physical protection engineering, desalinated water cooling, and high foreign licensing fees. What this imposes on technology managers and project leaders is the necessity to build systems that are highly efficient in resource consumption, avoid waste in calling large models, and prepare for scenarios of international link disruptions without confusing daily operations.