Sovereign Cloud Becomes UAE’s Strategic AI Backbone

Core42, a subsidiary of G42, is rapidly advancing the UAE’s ambitions in cloud sovereignty and artificial intelligence, combining regulatory assurance with innovation infrastructure. Mohammed Adnane Retmi, Vice President of Sovereign Public Cloud at Core42, has articulated how this approach is enabling regulated sectors and positioning the nation as an AI hub.

At the heart of Core42’s offering is its Sovereign Public Cloud, built atop Microsoft Azure but augmented with a proprietary controls layer named Insight. This architecture gives organisations greater oversight over data flows, workload placement, and compliance parameters while retaining access to hyperscale cloud infrastructure. The model effectively addresses one of the core tensions in AI deployment: enabling agility without compromising regulatory, privacy, and security obligations.

Core42 claims that over 50 customers across sectors such as banking, healthcare, energy, and government already use its sovereign solutions. Among them, First Abu Dhabi Bank is migrating core banking operations, while Abu Dhabi’s Department of Government Enablement has moved 47 entities and supports some 11 million daily citizen interactions via the platform. Core42 is also rolling out a “Signature Private Cloud” variant to serve workloads with the highest classification levels.

Microsoft and Core42 jointly published a whitepaper this year on “Balancing Innovation and Compliance in the AI Era”. It argues that sovereign-enabled public clouds can reduce friction between regulation and experimentation, especially in areas like fraud detection, predictive diagnostics, digital services, and real-time analytics. The paper notes that global spending on sovereign cloud solutions is projected to nearly double by 2027.

The UAE’s strategic bet is backed by broader investments and institutional support. The National Artificial Intelligence System will become an advisory member of the UAE Cabinet from January 2026, and AI is being introduced as a formal school subject from 2025-26. The country has also launched the UAE–US AI Campus, the largest of its kind outside the United States. Aligning digital sovereignty with economic ambition, the UAE has established the Artificial Intelligence and Advanced Technology Council and rolled out the UAE AI Charter and the Personal Data Protection Law to provide governance and guardrails.

Core42 and Microsoft’s collaboration is intended as a template for other jurisdictions. Their whitepaper emphasises that sovereignty is not merely about data localisation but about building an ecosystem where trust, governance, resilience, and innovation coexist. Core42 is enhancing its Insight control layer to offer automated compliance checks, visibility dashboards, and AI governance features, enabling users to deploy workloads with confidence.

The rising importance of sovereign infrastructure is mirrored in global market forecasts. Analysts estimate the sovereign cloud IaaS market — currently valued at roughly $37 billion — will grow at a 36 percent compound annual growth rate to hit $169 billion by 2028. In parallel, the broader AI market is expected to grow from $189 billion in 2023 to nearly $4.8 trillion by 2033.

G42, the parent of Core42, is itself making strategic moves abroad. It has established a U. S. entity in Delaware and is expanding operations for its cloud and data arms across the U. S. as part of a long-term $1.4 trillion investment framework. The company has also pitched the integration of Qualcomm’s Cloud AI 100 silicon into its Condor AI platform, reinforcing its ambition to control more of the AI stack.

Yet challenges remain. Enterprises worldwide are still grappling with immature data practices: more than 63 percent say they lack or are unsure of adequate data management frameworks for AI. For smaller firms, the upfront investment in sovereign architecture may be prohibitive. The digital divide between large and small players risks widening if only deep-pocketed organisations can access secure, regulated AI environments.

The UAE is also navigating geopolitical sensitivities. Its technology alliances, including those with Microsoft and U. S. firms, carry strategic implications, especially as powers like China view AI infrastructure as part of the global leverage game. For the UAE, aligning sovereignty with openness will remain a delicate balancing act.