As expected, 2025 was the year of the data center, as a digital infrastructure push led the communications sector to topple renewables as the segment seeing the most greenfield FDI globally, according to FDI Intelligence. Total FDI inflows came in at USD 1.3 tn, the fifth-highest figure on record.

Data centers did the heavy lifting for the communications sector, bringing in a record USD 319.7 bn — jumping from USD 184 bn the year before — and accounting for nearly 50% of the 129 mega projects of the year.

AI’s pull didn’t stop there — its infrastructure lifted FDI levels across other sectors. Investments into semiconductors came in at a record USD 138 bn last year.

A dip for renewables: The renewables sector was the second-largest FDI recipient, despite inflows falling 26% y-o-y to USD 193 bn. Green hydrogen, clean tech, and wind all saw commitment dips while solar power remained a bright spot, bringing in USD 75 bn, albeit still less than the previous two years.

Elsewhere, real estate attracted a decade-high USD 102.8 bn, up from USD 96 bn the year before, projects in aluminum and steel buoyed the metals sector’s USD 62 bn allocation, LNG boosted fossil fuels’ contribution of USD 54 bn, and chemicals made a comeback with USD 33 bn. Automotive manufacturing and electronic components both saw their inflows drop.

Our take: Investors are retreating from speculative, long-horizon green hydrogen projects as regulatory hurdles and uncertain revenue models stalled development — and as the focus shifts toward the physical infrastructure underpinning the global AI race. Investors are now prioritizing immediate AI computing capacity assets over future energy technologies.

This might not last long, though. Soaring data center demand is set to increase electricity consumption, turning these facilities into major bottlenecks for aging grids. The next wave of FDI is expected to give special attention to renewable projects designed exclusively to power AI campuses, rather than general grids. This strategy could push countries with abundant, low-cost power, such as the UAE and Saudi Arabia, to use their energy surplus in drawing digital investments from grid-constrained Western markets.

MARKETS THIS MORNING-

Asian markets were not immune from the sell-off hitting global markets, with South Korea’s tech-heavy Kospi leading losses in Asia with a 5% decline, and others a sea of red. Over on Wall Street, futures point to another volatile trading day after Amazon’s shares fell in after-hours trading.

ADX

10,548

+0.1% (YTD: +5.6%)

DFM

6,675

+0.2% (YTD: +10.4%)

Nasdaq Dubai UAE20

5,449

+0.3% (YTD: +11.5%)

USD : AED CBUAE

Buy 3.67

Sell 3.67

EIBOR

3.4% o/n

3.8% 1 yr

TASI

11,189

-1.3% (YTD: +6.7%)

EGX30

49,739

+0.2% (YTD: +18.9%)

S&P 500

6,798

-1.2% (YTD: -0.7%)

FTSE 100

10,309

-0.9% (YTD: +3.6%)

Euro Stoxx 50

5,926

-0.8% (YTD: +2.3%)

Brent crude

USD 67.55

-2.8%

Natural gas (Nymex)

USD 3.51

+0.0%

Gold

USD 4,732

-3.2%

BTC

USD 63,223

-13.4% (YTD: -28.8%)

Chimera JP Morgan UAE Bond UCITS ETF

AED 3.73

-1.3% (YTD: +1.7%)

S&P MENA Bond & Sukuk

151.99

+0.3% (YTD: +0.1%)

VIX (Volatility Index)

21.77

+16.8% (YTD: +45.2%)

THE CLOSING BELL-

The DFM rose 0.2% yesterday on turnover of AED 944.9 mn. The index is up 10.4% YTD.

In the green: United Foods Company (+14.9%), Drake & Scull International (+6.7%), and Shuaa Capital (+3.4%).

In the red: Emirates Reem Investments Company (-2.7%), Dubai Islamic Ins. and Reins. Co. (-2.6%), and Commercial Bank of Dubai (-2.6%).

Over on the ADX, the index rose 0.1% on turnover of AED 1.5 bn. Meanwhile, Nasdaq Dubai was up 0.3%.

Tags: