The Middle East has been the site of fantastical infrastructure projects and proposals before. Think of the Burj Khalifa in Dubai, Riyadh’s $22 billion metro system, the seven futuristic soccer stadiums built across Qatar for the World Cup, or the proposed linear cities and tourist hotels that would bring sci-fi landscapes to the Saudi desert.

But one of the most ambitious development projects in the region — a far-reaching effort to bring data and digital infrastructure to the desert — is well underway. In large cities like Abu Dhabi, Riyadh, Jeddah, Dammam, and Kuwait City, massive data-center complexes are being built to enable one of the most expensive and valuable things in the world: the digital cloud.

Across the region, local development companies and utilities, sovereign wealth funds, and even Silicon Valley giants have invested extensively in data centers and the cables that connect the digital world. Owing to tension in the Red Sea, where existing undersea cables ferry the world’s data, a race is underway to string cables above ground connecting Europe and Asia, with rival projects charting paths through Saudi Arabia, Jordan, and Iraq. 

“You need to have a good connectivity ecosystem if a region is going to grow as a data-center hub,” Ciena Chief Technology Officer Steve Alexander said. The firm is currently providing the equipment for a project laying a cable from Turkey through Iraq. “There’s a lot of money that’s been put into these cables, and a lot more that’s going to be put in.”

The Middle East doubled its IT infrastructure between 2021 and 2024, and the amount of data-center space under construction has increased twofold during that time — from 171 megawatts to 368 MW, according to Scott Roots, regional sales director for data-center analytic firm DC Byte. (The industry measures this construction in data stored versus square feet.) Saudi Arabia, which boasted 123 MW of data-center capacity at the end of 2023, according to DC Byte, plans to more than quadruple that over the next few years.

“It's a massive acceleration,” said Amro Almashharawi, Dubai-based vice president of digital transformation for the Uptime Institute, a global industry advocacy organization.

The region’s location at a geopolitical pinch point has long made it a political and economic nexus, and its petroleum wealth has made it a financial superpower. Now, the Middle East and its largesse are becoming a preeminent power player in the data business — the oil of the digital age. The return on investment can be massive; Almashharawi said he regularly sees 20% returns for data-center projects. 

But unlike in the US, where private firms and hyperscalers like Meta, Amazon, and Google have driven massive data-center booms in areas like Northern Virginia, the Middle East has governments investing in build-outs and incentives. As a result, issues of data sovereignty, growing workforces, and economic development efforts underpin the push to expand next-generation digital infrastructure. Almashharawi said this includes subsidized land, quicker permitting, lighter regulation, and even discounts on energy. 

A string of deals with Silicon Valley giants will only accelerate these developments. In March, Saudi officials announced $10 billion in data-center investment, with $5 billion coming from Amazon Web Services. G42, an Emirati artificial-intelligence company that’s working with a California startup to build its own Nvidia-level microchips, just signed a $1.5 billion deal with Microsoft. In June, the company’s CEO, Satya Nadella, was seen meeting with Sheikh Tahnoon bin Zayed, the UAE’s national security adviser and head of G42. In April, OpenAI’s Sam Altman visited the UAE to court Saudi money to fuel more investment in data centers, chips, and energy infrastructure to train AI, as well as develop a special AI-enabling semiconductor chip as part of a project code-named “Tigris.” 

And Gulf countries aren’t just attracting capital. They’re bringing in a skilled workforce from existing tech hubs — Google, Amazon, and Microsoft are all investing in Middle Eastern headquarters — and training and expanding domestic talent. They’re also already making serious headway in local technology development. Abu Dhabi has formed two AI-focused cloud companies called Core42 and AI71, which work with the homegrown Falcon AI model, an open-source, large-language model that outperforms Meta’s. 

All of this only plays more into the idea of creating a data hub in the Middle East. It’s already a nucleus of digital cables; that’s why the region around Muscat, the capital of Oman, is one of the more connected places on Earth, as far as undersea cables go. And big players in the region will be poised to spread internet infrastructure to neighboring North Africa and the rest of the continent, both fast-growing regions with poor digital connectivity. Core42 has a project underway with VAST, a data platform provider, looking to expand its AI-focused data center network globally.

But it’s safe to say the comparison between data and oil isn’t only monetary. All of this energy-intensive data-center growth will generate extensive carbon emissions. The International Energy Agency found data-center power demand, which currently accounts for 1.5% of global energy usage, will double by 2026, when the sector will use as much energy as the country of Japan. There have been some positive signs: the Moro Hub data center, the world’s largest solar-powered data center, opened in Dubai last year, and regional developers like Khazna have spoken about more sustainable developments. But large-scale solar and wind deployment for regional data centers is still in the works, Almashharawi said. The industry “is basically hydrocarbon for the time being,” he said.

Whatever the environmental effects are, the data gold rush is poised to pay off — for now. A PricewaterhouseCoopers study estimates AI will contribute $96 billion to the UAE’s economy and $135 billion to Saudi Arabia’s economy by 2030; only China and North America are expected to receive greater economic impact from AI. The rivalry between the UAE, which aims to create a $100 billion AI fund, and Saudi Arabia, which wants to partner with Andreessen Horowitz to create a $40 billion fund, has also sparked an investment race for more data centers. Damac, a UAE developer, committed last year to building its first data center in Malaysia, with plans to construct more facilities across southeast Asia and Africa. Much like oil, data has a global marketplace, and Middle East investors are all too happy to be key players in selling the fuel of the modern economy. 

Patrick Sisson is a reporter covering cities, technology, and business.