After having built cities from the desert, Gulf nations are now building the digital backbone of the future, investing heavily in AI and data centers to power life after oil. Gibson Dunn, Kirkland & Ellis, A&O Shearman, Covington & Burling, Baker McKenzie, Paul Hastings and other firms are in the middle of this bonanza, seeing a surge in data center-related work driven by Gulf ambitions and private-equity interest. A&O Shearman partner Ben Ward said there’s strong regional activity in data centers, driven by rising AI demand, that the firm is “deeply involved in many of these transactions, which are part of a continuing trend of international operators investing in the region, seeking scale and technology partnerships and supported by available capital.” But as Gulf states including Saudi Arabia and the United Arab Emirates push to diversify beyond oil, their massive investments in data centers and digital infrastructure come with risks from sustainability pressures to geopolitical complexity. Some banks also reportedly fear that the AI gold rush could turn into a debt-fueled bubble, echoing the dotcom crash of the early 2000s. 'Chip War'

AI relies on powerful data centers, which in turn depend on advanced chips made from semiconductor materials that are central to global innovation, defense, and economic growth. The U.S. and China are locked in a “chip war,” as Washington, D.C., restricts exports of AI chips and chip-making tools to China and pressures allies to do the same. Meanwhile, the UAE and Saudi Arabia aim to become an AI data center hub. In October, Emirati state-backed AI investor MGX, launched by Mubadala and G42, joined a consortium advised by Kirkland & Ellis to acquire Aligned Data Centers from Macquarie, advised by Latham & Watkins, in a $40 billion deal . The same month, Kirkland also advised Blackstone-backed AirTrunk on a $3 billion partnership with HUMAIN, a Saudi AI firm launched by the Public Investment Fund (PIF), to build data centers in the Kingdom. Covington, meanwhile, advised Qualcomm Technologies on its collaboration with HUMAIN to deploy advanced AI infrastructure in Saudi Arabia. “What’s really turbocharged interest in data centers in the Middle East and globally is AI and its tremendous potential for all manner of human endeavor,” said Joshua Gray, Covington’s technology and data-focused partner in London. Beyond private equity, Saudi Aramco has taken a minority stake in HUMAIN, while OpenAI has partnered with the UAE on Stargate UAE, a major Abu Dhabi data center project. MGX is also investing in OpenAI’s $500 billion Stargate initiative to build large-scale data centers in the U.S. Risks and Rewards

Gulf ambitions face risks, however, as they rely on imported technology, energy-intensive data centers raise sustainability concerns, and U.S. export controls make the Gulf a sensitive region in the global semiconductor and AI landscape. Marc Norman, of counsel at Covington in Dubai, said AI data centers are especially sensitive as they lie at the core of U.S.–China geostrategic competition. “We approach these deals with that geopolitical context in mind, considering trade controls, CFIUS/FDI screening, and other regulatory implications.” The regional data center boom is driving demand for law firms with cross-border expertise in M&A, finance, construction, and tech regulation, as clients favour those combining U.S.–U.K. experience with local knowledge and Arabic fluency. Law firms are relying on cross-practice collaboration rather than expanding headcount to manage these deals. Gibson Dunn advised KKR on its $5 billion acquisition of a stake in Gulf Data Hub, a Dubai-based operator advised by Baker McKenzie, as well as MGX on its participation in Databricks’ $10 billion Series J round. Over the past 16 months, the firm has handled seven regional data center deals worth more than $20 billion. “What’s interesting now is that data center projects are being approached more holistically, with greater focus on integrated power supply,” said Gibson Dunn partner Renad Younes in Abu Dhabi. “The Middle East benefits from strong energy availability, which makes its data center deal structures distinct from those in the U.S. or Europe.” Abeer Jarrar, partner at Baker McKenzie, added that major data center deals can involve 45 to 60 lawyers, supported by teams in London and other hubs, requiring deep regulatory insight and a cross-disciplinary approach. “With factors like power supply, investment screening, and energy costs in play, it’s a massive coordinated effort–a truly a team sport,” she said. Earlier this year, Baker McKenzie advised Ooredoo Group on a $1 billion partnership with Iron Mountain, advised by A&O Shearman, to expand data center infrastructure across the region. The firm has worked on five regional deals over the past year, each worth between $500 million and $5 billion. Data centers operate in a highly regulated environment, especially regarding U.S. export controls, requiring firms to work closely with specialist teams, according to Andrew Steele, a partner at Gibson Dunn. “These aspects add another layer to a transaction: it’s really an additional workstream,” he said. Recent examples include ADQ’s $25 billion U.S. infrastructure platform with Energy Capital Partners to DataVolt’s $20 billion AI campuses, KIA’s stake in Microsoft and BlackRock’s $30 billion fund, and PIF’s $10 billion cloud partnership with Google. The main challenges for law firms in data center work are coordinating multiple practices and keeping up with shifting regional regulations, said Stefan Mrozinski, partner at Paul Hastings in Abu Dhabi, whose key clients include G42. “These [regulations] have changed significantly over the past few years, so it’s essential to have lawyers with Arabic language skills, local cultural understanding, and deep regional experience,” he added. Business dealings in the Middle East unfold within a complex mix of cultural, legal, and geopolitical factors that extend beyond profit. This is especially true for sensitive sectors like data centers, where GCC countries’ ties with the U.S. are crucial for accessing the technology and chips needed to drive the AI ambitions of Riyadh and Abu Dhabi.