Microsoft has agreed to invest $1.5 billion in Abu Dhabi artificial intelligence group G42, its latest big bet on the technology that underscores deepening collaboration between the US and United Arab Emirates, Report informs referring to the Financial Times.

The agreement gives Microsoft a minority stake in G42, and its vice-chair and president Brad Smith will have a seat on its board. It comes after G42 severed its links to Chinese hardware suppliers, which had been the subject of scrutiny by US lawmakers.

The investment will strengthen Abu Dhabi’s position as an AI hub, and is a sign of the oil-rich emirate’s ambitions in the technology. It also shows how the Gulf, long seen by many in Silicon Valley as an easy source of funding, is increasingly regarded as a credible technology partner. “Given the importance of the technology and given how important it is to the two countries and two governments, we’ve taken this first step in close collaboration with the governments of both the UAE and the United States,” Smith said.

“We will take the next step and following steps in close collaboration with them as well.” Asked if the Microsoft deal was a prize for cutting ties with China, Peng Xiao, G42’s chief executive, said: “I would focus on our decision to form this partnership with Microsoft to really develop our capabilities on a global scale. Less focus on what we choose not to do.” As part of the deal, G42 would use Microsoft’s cloud computing platform Azure “as the backbone for the development and deployment of AI services we provide to all of our customers”, said Xiao. Smith said the companies planned to partner at a later stage on building out data centres in other countries. They will also support a $1bn fund for AI developers.

“Microsoft’s large investment is not something we do without a lot of thought,” Smith added. “And this decision reflects confidence by our company in the UAE as a country, in G42 as a company, and in Peng as its CEO.” Chaired by the UAE’s powerful national security adviser Sheikh Tahnoon bin Zayed al-Nahyan, who oversees a sprawling business empire, G42 is central to Abu Dhabi’s AI ambitions and is backed by Abu Dhabi sovereign investor Mubadala. G42’s companies range from data centres to healthcare, and it has produced an Arabic large language model called Jais.

AI leaders have been increasingly drawn to Abu Dhabi by its grand plans and deep pockets. It recently launched an investment company dedicated to AI deals, called MGX. Sam Altman, OpenAI’s chief executive, has visited several times, including this month, and has held discussions with UAE investors including Sheikh Tahnoon for a scheme to boost chip production, likely to cost billions of dollars.