Moody's names Azerbaijan a regional leader in AI infrastructure

Investments in artificial intelligence (AI) technologies will contribute to economic growth in Central Asian and Caucasus countries, while simultaneously increasing demand for infrastructure development, Moody's Ratings said, Report informs.

According to the international ratings agency, countries across Central Asia and the Caucasus are increasingly focusing on AI and digital infrastructure, viewing them as new pillars of economic modernization alongside transport, energy and logistics routes.

Governments in Central Asia and the Caucasus view AI as a tool for increasing productivity, diversifying their economies and strengthening global competitiveness, Moody's said.

The agency noted that successfully implementing these plans could increase the economic complexity of the region, but achieving these goals will require substantial investment in electricity infrastructure, telecommunications networks, water resources and a favorable regulatory environment.

Moody's stressed that AI adoption is creating conditions for broader economic transformation.

The agency noted that Azerbaijan, rated Baa3 with a positive outlook, Armenia, rated Ba3 with a positive outlook, Kazakhstan, rated Baa1 with a stable outlook, and Uzbekistan, rated Ba2 with a stable outlook, are taking the most significant steps in developing AI infrastructure in Central Asia and the Caucasus.

According to it, these countries are implementing major projects involving data centers, supercomputers and digital communications networks.

Beyond the initial construction phase, such infrastructure investments could support cloud services, AI applications, digital exports and localized AI ecosystems, while also contributing to the countries' growing geopolitical significance.

Moody's analysts said the effectiveness of AI infrastructure development will depend on reliable energy supplies, advanced telecommunications networks, access to water resources and land, as well as advanced computing capacity. Meeting these requirements will involve substantial financial costs.

Access to energy resources will most likely become a key competitive advantage, the agency said, noting that Kazakhstan, Azerbaijan and Uzbekistan are leveraging their domestic natural resources, while Tajikistan and Kyrgyzstan are developing specialized computing niches based on their hydropower potential.

Government support will be critical for attracting large-scale investment into the AI sector. Investors generally favor economies with transparent regulations and reliable infrastructure.

Differences in institutional quality and policy implementation practices mean that outcomes are likely to vary across Central Asian and Caucasus countries, according to Moody's.

The agency also pointed to the substantial capital requirements associated with data centers, fiber-optic networks and related energy infrastructure. As a result, governments' fiscal capacity to support private investment will become another important differentiating factor.

AI infrastructure development is most active in countries capable of combining ambitious policy agendas with energy resources, connectivity advantages or established technology ecosystems, Moody's said.

Kazakhstan has advanced the furthest in this area, positioning itself as a regional AI hub through large-scale data center construction programs, the creation of a national supercomputer and the expansion of domestic AI capabilities.

Uzbekistan is also attracting significant investment in data centers, linking these projects to renewable energy and preferential electricity supply conditions.

In the South Caucasus, Armenia is developing plans to invest in AI factories with the participation of international technology partners. Azerbaijan, meanwhile, intends to combine surplus energy capacity, fiber-optic infrastructure and data center development plans into an integrated digital corridor strategy, Moody's said.