Building the AI moat: The Middle East’s long game in artificial intelligence

In recent decades, the geography of innovation has followed a familiar pattern. Breakthrough technologies have tended to emerge from a small handful of ecosystems, most notably the United States, with China rising rapidly over the past decade by pairing scale with state-backed ambition. From semiconductors to cloud computing, advantage has historically accrued to those with early access to capital, talent and compute. Yet every technology cycle eventually reaches an inflection point, when the centre of gravity begins to move. With artificial intelligence, we are approaching that moment now.

As we look ahead to the latter half of this decade, the Middle East is no longer willing to settle for being an eager adopter of AI developed elsewhere. It is positioning itself as a credible contender for leadership, shaping not just how AI is deployed, but how it is developed, governed, scaled and embedded into society. The sands are shifting, and the implications are global.

There is no denying that the United States and China seized the early advantage in AI. The concentration of hyperscalers, research institutions and venture capital created a powerful flywheel that propelled innovation at extraordinary speed. But in 2025, the narrative began to change. The Middle East moved decisively from ambition to execution, backing its AI aspirations with capital, infrastructure and policy alignment at a scale few regions can match.

At the heart of this shift is investment in physical infrastructure. Next-generation AI data centres, designed for high-density compute and accelerated workloads, are being built across the region. These are not incremental upgrades but rather foundational assets intended to support large-scale model training, real-time data processing and sovereign AI capabilities. In a world where access to compute increasingly defines competitive advantage, this matters.

This is particularly important when the lens of sovereign AI is added on. The ability to develop and operate AI models within national borders, aligned to local values, languages and regulatory requirements, is becoming essential for governments and critical industries alike. This is emerging as a strategic priority globally, and is a space where the Middle East is uniquely positioned to lead. Sovereign wealth funds give the region a distinct edge, enabling long-term, patient investment that is not constrained by short political or market cycles. Where others debate feasibility, the Middle East is already building.

Crucially, early investment creates moats. We have seen this before. The United States’ early dominance in software platforms established decades-long leadership. China’s aggressive push into electric vehicles and battery technology created an ecosystem that is now difficult to dislodge. AI will follow a similar pattern. Regions that invest early in intellectual property, foundational models and data platforms do not simply gain a temporary lead. They shape the rules of the game for years to come and today, the Middle East has a rare opportunity to do exactly that.

Of course, technology leadership is not built on infrastructure alone. It also depends on the ability to move at speed, adapting policy and regulation to match the pace of innovation. Here, the Middle East enjoys an often-underestimated advantage.

This is a region that has demonstrated, repeatedly, that it can enact systemic change quickly. The UAE’s transition to a Saturday–Sunday weekend happened almost overnight, as did Sharjah’s move to a four-day working week. These were not symbolic gestures. They reflected a governance model capable of rapid recalibration in response to global realities.

That agility is even more evident in the region’s approach to emerging technologies. The UAE’s regulatory framework for crypto and digital assets offers a useful parallel. Rather than waiting for global consensus, regulators established clear, forward-looking regimes that balanced innovation with oversight. Virtual Assets Regulatory Authority (VARA), the Central Bank, the Dubai Financial Services Authority (DFSA) and ADGM’s Financial Services Regulatory Authority (FSRA) each oversee different aspects of the ecosystem, creating a diverse but coherent testing ground. The result is one of the most advanced regulatory environments globally for stablecoins and digital assets.

The same philosophy is now being applied to AI. Free zones such as DIFC, ADGM and QFC provide sophisticated data and AI governance models aligned with international standards, and in many cases exceeding them. These zones allow policymakers to experiment, refine and scale frameworks without the drag of legacy bureaucracy. For global organisations navigating regulatory uncertainty elsewhere, this clarity is deeply attractive.

AI leadership will not be achieved in isolation. The regions that succeed will be those that combine domestic ambition with global collaboration, drawing in capital, talent and expertise from around the world. Here again, the Middle East is setting itself apart.

Hyperscalers are making substantial, long-term investments in regional data centres. Semiconductor leaders, AI pioneers and research institutions are expanding their presence, not simply to serve local demand, but to co-create solutions with regional partners. This influx of global players serves to strengthen sovereignty, embedding the region into the fabric of the global AI ecosystem while retaining strategic control.

Collaboration also extends beyond technology vendors. Governments, academia and the private sector are increasingly aligned around shared AI objectives, creating an environment where experimentation is encouraged and scaled quickly. In a field moving as fast as AI, this alignment is invaluable.

For all the focus on models and machines, AI is ultimately a human story. Its value lies in augmenting human capability, enabling people to make better decisions, work more creatively and solve more complex problems. None of this is possible without a population that is willing and ready to engage.

Demographics are firmly on the Middle East’s side. The region has one of the youngest populations globally, with high levels of digital adoption and an appetite for new technologies. Governments are bolstering this advantage with significant investment in education, from AI-focused university programmes to national upskilling initiatives aimed at the existing workforce. World-class institutions are being established and global partnerships formed, ensuring that talent development keeps pace with technological ambition.

This combination of youth, education and openness to change creates fertile ground for AI to take root not as an abstract concept, but as a practical tool embedded in everyday life.

AI leadership is not declared. It is earned over time through consistent, coordinated action. What makes the Middle East’s current moment so compelling is not any single initiative, but the convergence of infrastructure, regulation, capital and talent. Few regions have ever been able to align these forces so deliberately.

The question is no longer whether the Middle East can play a meaningful role in the AI era. The real question is how boldly it chooses to shape that future. If the past is any guide, the regions that seize the moment early are the ones that define the next decade. Today, the sands are shifting in the Middle East’s favour, and the world is beginning to take notice.

Karim Azar, Area VP and General Manager, Confluent Middle East