Microsoft and Abu Dhabi-based artificial intelligence (AI) company G42 are joining forces to significantly expand Microsoft’s data centre capacity in the United Arab Emirates (UAE). The $200 million project will add 200 megawatts (MW) of capacity and is designed to meet the growing demand for Microsoft’s cloud services, particularly within the rapidly expanding AI sector. The infrastructure will be delivered by Khazna Data Centers, a subsidiary of G42, with the first components expected to be operational before the end of 2026. This expansion will bolster Microsoft Azure’s capabilities, emphasizing its secure and sovereign cloud services with advanced AI processing capabilities.
Context: A Wave of Digital Infrastructure Investments
The announcement comes on the heels of Microsoft’s broader commitment to invest $15.2 billion in the UAE by 2029, the largest investment ever made by the company in the Middle East. This latest data centre expansion is part of that significant investment and is indicative of a broader trend of digital infrastructure development in the UAE. Recent months have seen a flurry of announcements demonstrating the UAE’s growing importance as a hub for data centres and cloud services.
Key Highlights of the Expansion
Here’s a breakdown of what this expansion means:
- Capacity Boost: The addition of 200 MW of capacity will significantly increase Microsoft’s ability to serve the UAE market.
- Delivery Partner: Khazna Data Centers, a G42 subsidiary, is responsible for building and managing the infrastructure.
- Enhanced Capabilities: The expansion is geared towards strengthening Microsoft Azure’s secure, scalable, and sovereign cloud services, specifically enabling advanced AI processing. This includes advanced GPUs and capabilities designed for public sector organizations, regulated industries, and enterprises.
- Strategic Alignment: This project is consistent with Microsoft’s commitment to upskill one million people in the UAE by 2027 and recent investments like the opening of a Global Engineering Development Centre and an AI for Good Lab in Abu Dhabi. The in-country data processing for Microsoft 365 Copilot, set to launch in early 2026, will also benefit from the added capacity.
Khazna’s Growing Footprint
Khazna Data Centers itself is rapidly expanding, announcing plans to add over 1 gigawatt (GW) of operational capacity over the next five years. This includes deploying over 400 MW of new capacity across international markets like Saudi Arabia and Italy, alongside domestic facilities in Abu Dhabi, Dubai, and Ajman. Khazna is also playing a key role in delivering the infrastructure for Stargate UAE, a next-generation AI infrastructure cluster that is part of a planned five-gigawatt UAE-US AI Campus in Abu Dhabi, positioning it as a fast-growing hyperscale data centre platform.
Supporting National Economic Goals
The new data centre expansion serves multiple purposes: it addresses the increasing demand for Azure cloud services, aligns with Microsoft’s investment commitments, and supports the UAE’s national digital economy strategy. This strategy aims to double the digital economy’s contribution to the UAE’s GDP over the next decade, showcasing the nation’s ambition to be a global leader in the digital age. Microsoft’s substantial investments in the UAE, including the recent $1.5 billion equity stake in G42 and over $4.6 billion in cloud infrastructure, highlight its dedication to the region and its collaborative partnership with the UAE government.
The expansion demonstrates the UAE’s growing importance as a hub for data centers and cloud services, driven by both local demand and strategic government initiatives.
The increasing investment in data infrastructure solidifies the UAE’s position as a key player in the global technology landscape. The expansion of Microsoft’s data centre capacity is a significant step in realizing this vision
