Microsoft and G42 are teaming up to expand their data center capacity in the UAE by 200MW, as part of the previously announced $15.2 billion investment in the country.

The expanded data center capacity will be provided by G42's subsidiary, Khazna Data Centers, and is expected to go live before the end of 2026. It is unclear if this will be a new project or an expansion of the existing Khazna data center developments.

The plans emerged just days after Microsoft revealed a fresh investment of $7.9bn in the UAE between 2026 and the end of 2029, bringing its total commitment to the country to $15.2bn.

At the time, the company said $5.5bn of this sum will be used for the "on-going and planned expansion" of Microsoft's AI and cloud infrastructure.

According to Microsoft, the 200MW expansion will provide "additional world-class AI and cloud infrastructure to the UAE."

The cloud giant has recently also secured export licenses from the Trump administration, allowing it to ship “the equivalent of 60,400 additional A100 chips, in this instance involving Nvidia’s even more advanced GB300 GPUs,” the first company to successfully do so.

Brad Smith, vice chair and president of Microsoft, said: “This expansion is more than data centers. It’s about powering the UAE’s future. By combining Microsoft's global expertise with G42’s local leadership and broadening role as an international neocloud enterprise, we’re building the foundation for innovation that will bring new opportunities to people across the country."

Peng Xiao, group CEO of G42, added: “Our partnership with Microsoft advances our mission to build the Intelligence Grid, the interconnected infrastructure for intelligence designed to empower people, industries, and nations in the AI era. As a neocloud enterprise born in Abu Dhabi, G42 is advancing systems that are sovereign, secure, and open to global collaboration, keeping technology human by design.”

Microsoft invested $1.5bn in G42 in April 2024 for a minority stake in the AI firm. Shortly after, they announced plans to build a geothermal data center in Kenya. This followed a 2023 partnership in which the two said they would set up a sovereign cloud platform hosted in Khazna’s data centers.

Khazna Data Centers is a subsidiary of G42, and in October 2025, it unveiled a 1GW expansion plan. Khazna says it has 30 operational data centers, with more under construction.

It merged with G42 and e&'s data center operations in October 2021, a deal that made Khazna the UAE’s largest data center provider. MGX and Silver Lake recently invested in the firm, with e& exiting its stake.

The company broke ground on two new data centers in the UAE with a combined capacity of 60MW in April of this year. They are expected to be completed throughout 2026. The company is also delivering the infrastructure layer for Stargate UAE.

Microsoft currently has one cloud region in the UAE, launched in 2019 with three availability zones across Dubai.