Microsoft and G42 announce 200MW UAE data centre expansion
G42 subsidiary Khazna to enable major increase in Azure capacity
#UAE #datacentres – Microsoft and Abu Dhabi-based AI powerhouse G42 have announced a 200-megawatt (MW) expansion of Microsoft’s data centre capacity in the UAE to keep pace with demand for its cloud services. The infrastructure will be delivered through G42 subsidiary Khazna Data Centers and is expected to start coming online before the end of 2026, providing additional AI and cloud infrastructure to strengthen Microsoft Azure’s secure and sovereign cloud services. The news comes a couple of days after Microsoft’s announcement that it is investing $15.2 billion investment in the country.
SO WHAT? – The new 200MW of data centre capacity supports the continued expansion of Microsoft’s UAE cloud services business and also underscores the UAE’s status as one of the world’s fastest growing data centre and cloud services markets. The Microsoft data centre is one of a number of digital infrastructure announcements made during the past couple of months. Last week, G42 and Cisco revealed plans to deploy a large-scale AI cluster featuring AMD Instinct MI350X GPUs which will also come online in 2026. These projects are independent of the Stargate UAE AI cluster announced in May, which will also deliver 200MW in capacity in 2026.
Here are some key points about the expansion:
Microsoft an G42 have announced a 200MW expansion of Azure data centre capacity in the UAE, which will be delivered through G42 subsidiary Khazna Data Centers with infrastructure expected to start coming online before the end of 2026. The expansion forms part of Microsoft’s $15.2 billion investment commitment announced earlier this week.
The expansion will provide additional world-class AI and cloud infrastructure to strengthen Microsoft Azure’s secure, scalable and sovereign cloud services, with advanced GPUs and AI capabilities enabling public sector organisations, regulated industries and enterprises to innovate and scale operations.
Khazna Data Centers last month announced plans to add more than 1GW in operational capacity over the next five years, deploying more than 400 megawatts of new capacity across international markets including Saudi Arabia and Italy alongside domestic facilities in Abu Dhabi, Dubai and Ajman.
The G42 subsidiary is delivering the infrastructure layer for Stargate UAE, the next-generation AI infrastructure cluster being built as part of the planned five-gigawatt UAE-US AI Campus in Abu Dhabi, positioning Khazna as one of the fastest growing hyperscale data centre platforms globally.
The data centre expansion supports both market demand for Azure cloud services, and several key Microsoft’s commitment. The technology leader aims to skilling-up one million people in the UAE by 2027, and recently opened a Global Engineering Development Centre and an AI for Good Lab in Abu Dhabi.
In October, Microsoft announced that it will provide in-country data processing for Microsoft 365 Copilot in the UAE, set to go live in early 2026. The processing will be hosted within Microsoft’s Dubai and Abu Dhabi cloud data centres.
The continued infrastructure expansion also supports the UAE’s wider national digital economy strategy, which targets doubling the digital economy’s contribution to GDP over the next decade.
ZOOM OUT – Earlier this week, Microsoft announced that it is investing $15.2 billion in the UAE by 2029, marking the largest Middle East investment announced by the software giant to-date. More than $7.3 billion has already been invested since 2023, including the $1.5 billion equity stake in G42 announced last year and over $4.6 billion in cloud infrastructure, with the remainder funding local operations and AI talent development. The commitment reflects Microsoft’s growing business in the country, its close relationship with the UAE government, and its deepening partnership with G42.
[Written and edited with the assistance of AI]
Read more about cloud and data centres in the UAE:
Cisco and G42 to deploy AMD MI350Xs for new AI cluster (Middle East AI News)
Khazna plans over 1GW capacity expansion by 2030 (Middle East AI News)
Cerebras to expand AI infrastructure to the UAE (Middle East AI News)
US approves billions in Nvidia UAE sales (Middle East AI News)
Tech leaders unite to build Stargate UAE AI hub (Middle East AI News)
The $15.2B investment really underscores Microsoft's long term bet on Azure's growth trajectory in emerging markets. What's particularly intresting is the strategic timing with G42's buildout supporting sovereign cloud requiremnts. This positions them ahead of hyperscaler competition in the region.
The 200MW expansion alongside Khazna's aggressive 1GW+ buildout really signals how seriously Microsoft is taking the Middle East as a strategic AI hub. Getting capacity online before end of 2026 puts them ahead of most hyperscalers in the region. What's interesting is how this ties into the broader $15.2B commitment, it's not just infrasructure but the entire ecosystem from talent development to sovereign cloud services.