Elon Musk’s AI startup, xAI, is reportedly negotiating to secure data center capacity in Saudi Arabia.

The discussions involve two potential partners: Humain, a Saudi-backed AI firm, and another company developing a smaller data center.

Humain has proposed providing xAI with several gigawatts of capacity, although much of its infrastructure is still in development.

The second company is constructing a 200-megawatt facility, which may offer a more immediate solution for xAI’s computing requirements.

Both proposals would involve xAI leasing capacity instead of owning the facilities.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Middle East emerges as AI infrastructure powerhouse amid global computing race

The Middle East data center market is experiencing unprecedented growth, creating a strategic opportunity for AI companies like xAI seeking computing resources and capital.

The region’s data center market is projected to grow from $8.63 billion in 2024 to $19.89 billion by 2030, representing a 14.93% annual growth rate1.

Saudi Arabia and the UAE are leading this expansion, with 43 and 56 data centers respectively, as both countries focus on building sovereign cloud infrastructure specifically designed for AI workloads2.

This growth aligns with broader government initiatives like Saudi Arabia’s Vision 2030, which aims to diversify the economy away from oil dependency through massive technology investments, including the $500 billion Neom project3.

For AI companies, the region offers a compelling combination of advantages: abundant capital from sovereign wealth funds, strategic locations connecting global networks, and governments actively courting technology partnerships to accelerate their digital transformation goals.

2️⃣ AI computing’s enormous energy demands reshape data center strategies

xAI’s interest in Saudi Arabia reflects a critical industry-wide challenge: the extraordinary power requirements of modern AI systems are forcing companies to prioritize energy availability in their infrastructure decisions.

AI data centers require significantly more energy per square foot than traditional facilities, with power demands projected to grow from 4 gigawatts in 2024 to a staggering 123 gigawatts by 20354.

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