Microsoft and the UAE Chart a New AI Frontier

Five-year plan builds data centres and skills base as Abu Dhabi links digital growth with energy-sector efficiency

20 Nov 2025

The United Arab Emirates has announced a $15.2bn plan with Microsoft to expand artificial intelligence and cloud infrastructure across the economy, seeking to strengthen the country’s position in digital services and advanced computing.

The initiative, unveiled in November 2025, runs through 2029 and builds on Microsoft’s earlier $7.3bn commitments in the UAE. These include a $1.5bn investment in G42, the Abu Dhabi-based AI group, with a further $7.9bn to be deployed. The programme will fund new data centres, increase computing capacity and train local workers to build and operate AI systems.

Officials said the investment was intended to support growth in finance, logistics and public services, while also accelerating digital tools in the energy sector, which remains central to the UAE economy. Oil and gas operators are expected to adopt AI to predict equipment maintenance, reduce emissions and improve production efficiency. “The UAE isn’t just adopting AI,” said one analyst. “It’s redefining how data and energy converge.”

For Microsoft, the agreement strengthens its presence in a market aiming to become a regional hub for cloud computing. The company has expanded similar partnerships in other Gulf states as governments invest in digital infrastructure and seek to attract global technology providers.

Analysts said the UAE’s move reflects a wider trend among energy-producing countries that are directing capital towards data infrastructure to diversify future sources of growth. They noted that large-scale AI adoption still faces obstacles, including the high power needs of data centres and the challenge of linking complex systems with existing industrial processes.

The government has pledged to increase renewable energy generation to meet rising electricity demand from digital projects, aiming to limit the carbon impact of new facilities. Authorities also plan to expand training programmes to ensure that domestic workers can support the broader use of AI across industries.

The partnership is expected to influence policy discussions on regulation, data standards and energy planning in the coming years as the country weighs how best to integrate advanced computing with traditional sectors.