AI, energy and data centres: How the UAE has approached Trump's second term

Analysts say recently announced tech investment deals are rooted in lengthy US-UAE partnership

Developments about partnerships between UAE and US entities have been prolific in recent weeks. There may be more during US President Donald Trump's visit to the Arabian Gulf Bloomberg

Since US President Donald Trump returned to office this year, his administration has announced a series of partnerships and investments involving the UAE – and more could come out of his upcoming trip to the Gulf.

The White House announced in March that the UAE had pledged a $1.4 trillion “investment framework” for projects related to artificial intelligence infrastructure, semiconductors, energy and manufacturing.

That announcement followed moves in the private sector, with MGX pledging $7 billion as part of the Stargate venture and Damac planning to invest at least $20 billion to build US data centres.

Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, has also said XRG, Adnoc's global investment firm, will make “serious, large, significant” investments in the US.

This is because, he said at the time in Houston, the UAE sees investing in the US an “absolute imperative”.

“There's ambition for Trump to have the Emiratis be among those investing in AI infrastructure in the US,” said Rachel Ziemba, founder of Ziemba Insights.

“And there's an interest there from the Emiratis, and there's an interest in the Emiratis of getting to be in the US ecosystem for AI.”

The UAE sees AI as a major driver of its economic diversification efforts, and its partnerships with the US in the sector predate the second Trump administration.

Last year, Microsoft signed a $1.5 billion deal with Abu Dhabi's G42. Later that year, MGX joined BlackRock GIP and Microsoft in a $30 billion AI infrastructure fund, which in March expanded to include Nvidia and xAI.

These planned investments were made on top of the $1 trillion acting investments the UAE had made in the US.

Energy push

Along with the growth of AI, there has been an expansion of data centres housing the semiconductors and graphics processing units needed to power iterations of AI such as chatbots, transcription tools and image generation software

As a result of the electricity demand from the burgeoning AI sector, energy grids all over the world could soon become overburdened.

That is not lost on the UAE, which has a historically strong presence in the energy sector, nor has it gone unnoticed by the US, which is seeking to maintain its lead in AI, with China nipping at its heels through companies like DeepSeek and Huawei.

In March, Abu Dhabi's sovereign wealth fund ADQ announced that it had joined with US private equity firm Energy Capital Partners to invest more than $25 billion in energy projects to power data centres, mostly in the US.

That investments will be carried out through a 50-50 partnership across 25 gigawatts' worth of new power generation and energy infrastructure, according to ADQ.

But the UAE's energy investments are not limited to AI.

Mubadala has agreed to acquire a minority stake in Kimmeridge Texas Gas, which is focused on unconventional gas business in Texas. It is also planning to build a liquefied natural gas facility in Louisiana that will produce 9.3 million metric tonnes of the product each year.

Was AI diffusion the lone hiccup?

Yet for all the announcements of co-operation between the UAE and the US, there are lingering concerns in the Gulf country about AI chip exports.

The US has expressed concern that China, which it views in an increasingly adversarial light, might be using US-made AI technology to bolster its own technological ambitions.

Those concerns led to the development of what's become known as AI diffusion rules, announced in January in the final days of former president Joe Biden's administration. The rules would place limits on the various chips available to certain countries and have become a source of ire for countries like the UAE, Israel, Saudi Arabia and others.

Big tech firms and countries with AI ambitions are hoping that US President Donald Trump makes changes to chip export rules. Reuters

Critics of the rules said that they penalise countries with peaceful AI aspirations. Until recently, there was no indication that Mr Trump would change the policies before May 15, when they are scheduled to go into effect.

But that changed in recent weeks, Mr Trump told reporters he would soon announce changes to the proposals.

Also helping change the policies were pushes from US tech heavyweights like Nvidia and Microsoft, which have both spoken highly about and invested in the UAE.

Both Nvidia and Microsoft have said that the AI diffusion rules were unfair.

In addition to those technology businesses vouching for the UAE, the energy and data centre deals announced by companies in the country are also likely to have helped in alleviating chip export worries.

“Partnering with these key US firms and agreeing to use US infrastructure is a way to mitigate some of those risks,” Ms Ziemba said.

Better, worse or about the same?

Robert Mogielnicki, a senior resident scholar at the Arab Gulf States Institute in Washington, pointed out that the recent announcements did not happen in isolation.

“There's a strong historical foundation of investments between the US and the UAE,” he said, pointing out that the two countries share a history of strong trade ties, with bilateral trade reaching $34.4 billion last year, according to the Office of the US Trade Representative.

He also cautioned that because of the nature of investments work, it would be best to wait and see how everything pans out.

The US and UAE share a long history of strong trade ties with bilateral trade reaching $34.4 billion in 2024. WAM

“A framework is precisely that – it's a kind of intention to invest,” he said, referring to the White House announcing the UAE's $1.4 trillion commitment back in March.

“Investments can take years … to reach that final investment decision stage.”

Yet for Mr Trump, who won the White House twice on a campaign of promises with limited details of how they would be accomplished, the recent flurry of UAE announcements is ideal.

“This is a type of engagement that resonates with President Trump and his administration more so than the Biden administration,” Mr Mogielnicki said.