Where should I build my Massive Data Center?
- ICM
- May 31
- 4 min read
Updated: Jun 10
Where, in 2025, should one build a profitable artificial intelligence (AI) data centre? The simplest and most strategic answer is no longer Silicon Valley, nor Virginia’s data-centre corridor. It is the Gulf - specifically, Saudi Arabia or the United Arab Emirates.
If you want to have the highest yield for your investment in hyperscale scale datacentres you want three things: Cheap power, and the other two things don’t matter.
Siting hyperscale data centres used to be about proximity to users, robust legal protections for intellectual property, and fibre latency to major markets. Those still matter—but less than they once did. In the age of trillion-parameter models, nothing trumps power. Cheap, abundant, and preferably green electricity is now the key determinant of profitability. The Middle East has this in spades, marrying fossil-fuel abundance with, nuclear and of course an unsurprising edge in solar generation.
The result is that America’s increasingly strained grid—burdened by escalating AI workloads and bureaucratic permitting delays—is no longer the most fertile ground for expansion. The compute gap (the gulf between demand for processing power and the infrastructure to deliver it) is evident both at the nanometre level in chip fabrication and at the gigawatt level in data-centre development. Already, America faces a projected shortfall of over 1GW in data-centre power capacity by 2026. Several hyperscale campuses have delayed their launches this year due to local grid constraints.
In contrast, the UAE is forging ahead. This week, Abu Dhabi announced a 5GW data-centre project—an eye-watering figure in an industry where even a 100MW facility is considered large. That capacity will likely be distributed between solar generation (Al Dhafrah’s 2GW photovoltaic plant is among the largest in the world) and nuclear baseload from the Barakah facility, a 5.6GW atomic plant some 200 miles west. The selected site, based on geospatial analysis, appears to be in Al Dhafrah, adjacent to transmission-grade 400kV lines and desert land ripe for phased construction.
Behind the effort is G42, the UAE’s digital infrastructure juggernaut. The firm has locked in forward supply of GPUs from Nvidia—outcompeting many rivals for scarce chips.
G42’s chairman is not your average technology executive. Sheikh Tahnoun bin Zayed Al Nahyan is both the UAE’s national security adviser and the brother of the president. His entwinement of sovereign capital, private infrastructure and geopolitics offers the kind of strategic alignment American firms can only envy. It also gives G42 unusual latitude to pursue long-term plans unconstrained by quarterly earnings. Interestingly Tahnoun is also the nation's national security adviser and chair of Stargate-backer MGX.
Stargate is America’s most ambitious AI initiative. SoftBank, OpenAI, Oracle, and Abu Dhabi's MGX are the equity investors in Stargate, with SoftBank having financial responsibility and OpenAI having operational responsibility. SoftBank's Masayoshi Son will serve as chairman.
A comparison between G42’s Abu Dhabi AI campus and the USA Stargate plan is instructive:
The HPQC team looks at these macro plans to predict where current chip technology and data centre tech start-up may intersect the demand curve in a few years’ time. Consider Cerebras, who you will have seen on our decks for almost two years now. Their unique full-wafer compute architecture is purpose-built for dense AI training. G42 is both its largest customer and a strategic investor. G42 is separately spending around $900 million on Cerebras Systems mega chips to deploy across nine supercomputers in the US. The firm recently filed for an IPO -- will early investors see 8–10x return? Seems likely.
For those of us at HPQC Fund, such deployments are more than macroeconomic curiosity. They represent specific opportunities to back the critical technologies—compute fabrics, power systems, cooling solutions, and security architectures—that underpin the next generation of AI infrastructure.
In the months ahead, expect a shift in global capital flows: not away from America, but toward the rising desert empires that can do what America now struggles to—build at speed, at scale, and with power to spare. What they will be putting into those pricey DC’s is where we invest
Questions or investment inquiries may be directed to the HPQC Fund team.
More Reading:
US: Stargate Data Center Initiative (USA)
OpenAI to Shift 75% of Data Centers to Stargate by 2030
OpenAI is preparing to shift the bulk of its AI compute to Stargate campuses by the end of the decade, in what could be the largest AI infrastructure project ever attempted.
📎 Source: Tech in Asia (May 2025)
States Compete for OpenAI's $100 Billion Stargate Project
At least 20 U.S. states are now lobbying to host Stargate facilities, offering incentives such as land, tax relief, and power subsidies.
📎 Source: The Washington Post (May 10, 2025)
SoftBank and OpenAI's $100B Investment Faces Tariff Delays
U.S. trade policy has delayed shipments of AI chips needed for Stargate’s first campus in Texas, adding friction to the project.
📎 Source: New York Post (May 12, 2025)
Microsoft Clarifies Relationship with OpenAI Post-Stargate Deal
Microsoft reiterates it still holds a “right of first refusal” on OpenAI workloads, even as OpenAI builds its own data centers.
📎 Source: Data Center Dynamics (May 9, 2025)
Microsoft Cancels 200MW of AI Data Center Leases
In a strategic reshuffling, Microsoft has reportedly withdrawn from multiple AI data center projects, possibly in light of OpenAI’s Stargate initiative.
📎 Source: Data Center Dynamics (May 8, 2025)
🌍 Middle East Data Center Investments
OpenAI to Help UAE Develop One of World's Largest Data Centers
The UAE is partnering with OpenAI to build a 5GW AI super-campus in Abu Dhabi, with global implications for compute distribution.
📎 Source: Reuters / Bloomberg (May 16, 2025)
U.S. and UAE Plan 5GW AI Data Center Campus in Abu Dhabi
A cooperative effort between G42, Microsoft, and OpenAI is set to transform Abu Dhabi into a regional AI and cloud hub.
📎 Source: Data Center Dynamics (May 8, 2025)
Trump Reveals Path for Abu Dhabi to Import U.S.-Made AI Chips
Former President Trump unveiled a deal that allows the UAE to import advanced NVIDIA GPUs for G42’s data centers.
📎 Source: New York Post (May 16, 2025)
Nvidia to Send 18,000 AI Chips to Saudi Arabia
Saudi Arabia receives a major boost in its AI ambitions as NVIDIA agrees to supply high-performance GPUs to Riyadh.
📎 Source: Associated Press (AP News) (May 6, 2025)
AI Arrives in the Middle East: U.S. Strikes Deals with UAE and KSA
The U.S. has finalized chip and compute agreements with the UAE and Saudi Arabia, establishing a regional AI bridge.
📎 Source: SemiAnalysis (May 16, 2025)
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