Sovereign wealth funds from the Middle East are emerging as major supporters of Silicon Valley‘s leading AI companies. Oil-rich nations such as Saudi Arabia, the UAE, Kuwait, and Qatar are diversifying their economies by investing in technology, using it as a hedge. Over the past year, Middle Eastern sovereign investments in AI companies have surged fivefold, according to Pitchbook data.
MGX, a new AI-focused fund from the UAE, was reportedly among the investors seeking to participate in OpenAI’s latest fundraising round, which could value the company at $150 billion, according to two sources speaking to CNBC on condition of anonymity due to confidentiality.
Few venture funds can match the multibillion-dollar investments from tech giants like Microsoft and Amazon, but Middle Eastern sovereign wealth funds, backed by rising energy prices, have no trouble financing AI deals. These funds manage vast wealth on behalf of their governments. According to Goldman Sachs, the Gulf Cooperation Council (GCC) countries’ total wealth is expected to grow from $2.7 trillion to $3.5 trillion by 2026.
Saudi Arabia’s Public Investment Fund (PIF), which manages over $925 billion, has been aggressively investing under Crown Prince Mohammed bin Salman’s “Vision 2030” plan. PIF’s portfolio includes companies like Uber and significant spending on the LIV golf league and professional soccer.
The UAE’s Mubadala manages $302 billion, while the Abu Dhabi Investment Authority oversees $1 trillion. Qatar Investment Authority holds $475 billion, and Kuwait’s fund has surpassed $800 billion.
Earlier this week, Abu Dhabi-based MGX partnered with BlackRock, Microsoft, and Global Infrastructure Partners to raise up to $100 billion for AI infrastructure investments, including data centers. MGX, launched in March, was created as a dedicated AI fund with Mubadala and AI company G42 as founding partners.
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Beyond the Middle East, other countries are investing heavily in AI. French sovereign fund Bpifrance has completed 161 AI and machine learning deals in the past four years, while Singapore’s Temasek and GIC have closed 47 and 24 deals, respectively, according to Pitchbook.
Some Silicon Valley investors express concerns about a “SoftBank effect,” referring to the Japanese Vision Fund that inflated valuations for companies like Uber and WeWork. WeWork, once valued at $47 billion, declared bankruptcy in 2023.
For the U.S., encouraging sovereign wealth funds to invest in American companies, rather than in rivals like China, is a geopolitical priority. Jared Cohen of Goldman Sachs Global Institute noted that a disproportionate amount of capital is flowing from countries like Saudi Arabia and the UAE, which he described as “geopolitical swing states” with a global investment reach.
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