Almost a decade ago, Gulf sovereign wealth funds drew sharp criticism from financial analysts for investing heavily in frontier technology. The investments often comprised speculative Silicon Valley ventures, rather than sticking to traditional portfolios of infrastructure, real estate, or public equities that provided steady returns.
Some of that criticism was warranted.
The Saudi’s PIF and Abu Dhabi’s Mubadala made sizeable investments in SoftBank’s debut $93 billion Vision Fund 1, launched in 2017. It saw high-profile missteps with “disruptor” startups, most notably WeWork which was forced to file for bankruptcy and restructure billions in debt. SoftBank was dubbed the “Nasdaq whale” for stoking the fevered rally in big tech stocks.
It’s a very different story today as the Gulf funds stand ready to reap multi-billion-dollar windfalls as stakeholders in SpaceX, tipped to make history on Wednesday with a $1.77 trillion listing.
The PIF-backed AI venture HUMAIN invested $3 billion into xAI’s $20 billion Series E round in February, shortly before it merged with SpaceX.
Humain said the deal made it a “significant” minority shareholder in xAI, and that its holdings subsequently converted into SpaceX shares.
Prince Alwaleed’s Kingdom Holding, the Oman Investment Authority and the Qatar Investment Authority acted as foundational investors in xAI during a Series C round in December 2024.
The UAE also has good representation. Both the International Holding Company and Alpha Dhabi Holding invested in SpaceX in 2022, while Abu Dhabi’s advanced technology investor, MGX, also participated in xAI’s last funding round.
But SpaceX’s IPO is just the beginning. OpenAI and Anthropic—in which Gulf investment is also embedded—also plan to go public this year with possible trillion-dollar listings.
At the end of May, Anthropic raised $65 billion in a Series H funding round that trebled the AI company’s valuation to $965 billion, leapfrogging rival OpenAI as the world’s most valuable AI developer. OpenAI’s most recent valuation from private investors came in at $852 billion.
Anthropic said the funding it secured—including from MGX—will be used to expand computing capacity as demand for Anthropic’s products continues to accelerate.
Securing access to computing power is becoming a key hurdle in the global AI race as companies compete to train increasingly powerful models.
With stated goals for AI to contribute significant percentages to their GDPs—Saudi Arabia is targeting 12% by the end of the decade and the UAE is aiming for 40% by 2031—the Gulf states view it as a central plank of their economic diversification strategies.
In a bid to forge a competitive edge at home and abroad, they are pouring billions of dollars into data centers, hardware, and strategic partnerships.
Last year, the UAE and the U.S. joined forces in establishing an AI Acceleration Partnership designed to advance global artificial intelligence infrastructure and ensure supply chain security.
One of its flagship ventures is the Stargate UAE project, comprising a 1-gigawatt compute cluster, which forms part of a bigger campus that will provide up to 5 gigawatts of computing power for AI data centres in Abu Dhabi.
Stargate UAE is set to be the largest facility of its kind outside the U.S., with the first phase consisting of 200 megawatts expected to become operational before the end of the year.
The entire campus is being developed by Abu Dhabi’s G42 in partnership with OpenAI, Oracle, Nvidia, Cisco and SoftBank and will cost around $30 billion to build. It is expected to cover an area larger than Monaco.
Last month, the UAE received its first shipment of Nvidia chips which are being used to help construct the sprawling 5GW AI campus.
“At a moment when capital spending on AI infrastructure is climbing into the hundreds of billions of dollars, the Gulf’s appetite for scale and speed gives Washington something rare: an external accelerator,” Mohammed Soliman, a senior fellow at the Washington-based Middle East Institute, said in a report published earlier this year.
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