Middle Eastern funds are plowing billions of dollars into hottest AI start-ups

Sovereign wealth funds out of the Middle East are emerging as key backers of Silicon Valley's artificial intelligence darlings.

Oil-rich nations like Saudi Arabia, United Arab Emirates, Kuwait and Qatar have been looking to diversify their economies, and are turning to tech investments as a hedge. In the past year, funding for AI companies by Middle-Eastern sovereigns has increased fivefold, according to data from Pitchbook.

MGX, a new AI fund out of The United Arab Emirates, was among investors looking to get a slice of OpenAI's latest fundraise this week, two sources told CNBC. The round is set to value OpenAI at $150 billion, said the people, who asked not to be named because the discussions are confidential.

Few venture funds have deep enough pockets to compete with the multibillion-dollar checks coming from the likes of Microsoft and Amazon. But these sovereign funds have no problem coming up with cash for AI deals. They invest on behalf of their governments, which have been helped by rising energy prices in recent years. The Gulf Cooperation Council, or GCC, countries' total wealth is expected to rise from $2.7 trillion to $3.5 trillion by 2026, according to Goldman Sachs.

The Saudi Public Investment Fund, or PIF, has topped $925 billion, and has been on an investing spree as part of Crown Prince Mohammed bin Salman's "Vision 2030" initiative. The PIF has investments in companies including Uber, while also spending heavily on the LIV golf league and professional soccer.

UAE's Mubadala has $302 billion under management, and the Abu Dhabi Investment Authority has $1 trillion under management. Qatar Investment Authority has $475 billion, while Kuwait's fund has topped $800 billion.

Earlier this week, Abu Dhabi-based MGX