The Middle East is using startup investment, data infrastructure and talent policies to build greater control over its digital economy, according to an analysis published by Arab America.
Saudi Arabia and the UAE are at the center of this push, with both countries investing in what is increasingly known as “Sovereign AI,” the development of artificial intelligence infrastructure, data and models under national control. Saudi Arabia has designated 2026 as the “Year of Artificial Intelligence,” while the UAE has launched a national-scale Sovereign AI Platform.
Data localization rules are also driving demand for regional cloud infrastructure. Saudi Arabia’s Cloud First Policy and the UAE’s data protection frameworks require certain government and regulated-sector data to remain within national borders.
The article said Gulf countries accounted for the largest share of the $66 billion invested globally by government-owned funds in AI and digital infrastructure in 2025. The UAE is also planning an AI hub with 5 gigawatts of computing capacity, including the Stargate UAE data center project.
Cybersecurity is another priority, with regional spending expected to reach $4 billion this year. At the same time, expanded residency programs in the UAE and Saudi Arabia are being used to attract entrepreneurs, researchers and technology specialists.
Sovereign wealth funds and government-backed hubs are providing patient capital, infrastructure and potential access to enterprise and public-sector pilots. The broader strategy, the article argues, is positioning Gulf states as a third path in global technology competition while creating new opportunities for the region’s young workforce.
Source: Arab America
