Hasnain Malik, Emerging Markets Equity Strategist at Tellimer, discusses the Gulf's push into AI data centers. He also discusses the demand for IPOs in the Middle East region.

Dubai

Saudi Arabia and the UAE are intensifying their focus on artificial intelligence, aiming to become leading infrastructure providers after the U.S. and China. This initiative is part of a broader strategy to diversify their economies beyond oil, leveraging advantages such as cheap power and surplus land for data center development.

The expansion into AI and data centers is also seen as a way to cement long-term geopolitical ties with the United States, given the privileged access to high-end semiconductor technology. Meanwhile, the region's appetite for initial public offerings remains strong, though the future of IPO activity depends on the maturity of non-oil sectors and regional stability.

Gulf's AI push is about cementing U.S. relations: Strategist

Another theme that has been constant in 2025 is artificial intelligence. And we heard in Riyadh at the FBI summit that there is this push to become the third largest infrastructure provider after the United States and China in terms of this diversification in terms of the push for artificial intelligence. How what are you watching there. Well I think first of all you take a step back. The push into artificial intelligence by particularly Saudi Arabia and the UAE is another stage in non-oral diversification. You know a process that started by moving into transport and logistics for trade to tourism and air transport and then to expatriate population centers and offshore finance centers. So AI is the build out of AI data center infrastructure is the next stage of that strategy. I think the other thing though is we have to also put a geopolitical lens on this which is the access to high end semiconductor technology is one that will cement the relationships between the likes of Saudi Arabia and the UAE with the U.S. long term. That access is to a degree privilege. It's not something that every country in the world can can get their hands on. And in a way I would almost say that the diversification into a data centers is as much about cementing the geopolitical relationship with the U.S. as it is about driving the next leg of economic growth. When you take a step back and you look at this purely in economic terms what this region does have. And again we're seeing Saudi and the UAE drive this charge is the access to cheap power and the availability of surplus land. Those are two of the things that are critical to data center infrastructure build out. That's a competitive advantage that these countries can leverage and they are leveraging. I still remember Saudi Aramco's IPO back in 2019. Hong Kong is salivating over that. We're still waiting for it by the way. But I want to ask you about the IPO activity in what was a standout to becoming a laggard in 2025. What is the outlook for initial initial public offerings. So I think what remains the case and it's interesting you allude to the Aramco decision to list within within Saudi which is that the domestic or the regional appetite for IPO still remains pretty vibrant. You know there is probably still not enough listed equity to support the size of regional savings and regional sovereign wealth funds. There is also a drive to redirect sovereign wealth a little more inward as opposed to the natural default which has been overseas investment. And you've seen that explicitly for example in the public literature from the Public Investment Fund in Saudi Arabia. So I would expect there to continue to be sufficient demand for IPOs in this region. The question really is in particularly the GCC is are the non-oil economies big enough as yet. And are there sufficient. Is there a sufficient pipeline of companies in those non-oil sectors to come to market. Are they mature enough. I think the evidence of the last three or four years is that there is a healthy pipeline. I think last year what you saw was a pause because of some of that geopolitical tension around the region because of that fall in oil price. I think if you see stable oil price and if you see conflicts that don't directly infect the economies of the reasons in which these companies are operating then I don't see any reason why the IPO market won't once again become a buoyant one over the coming couple of years.

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Al Mukalla

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Breakdown