Turan Research Center

Armenia’s Soviet-era past, U.S. technological know-how, and a globally connected diaspora are converging to give the small, landlocked republic a rare chance to leapfrog into the next phase of digital transformation – Artificial Intelligence (AI).

The recent announcement of a $500 million AI “factory” -- an enhanced data center designed to train, refine, and deploy AI models – signals Armenia's ambition to transcend its role as a regional IT hub. Instead, it hopes to become an important node in a developing global AI ecosystem that could shape the future.

“We are excited about the potential for U.S. technology exports and AI leadership to drive more innovation in Armenia’s dynamic tech sector, benefitting the United States and Armenia,” said U.S. Ambassador to Armenia Kristina Kvien in June about what Pashinyan has called Armenia’s “largest and most important" tech investment. “Companies like Nvidia continue to offer world-leading computing and AI solutions, and we are proud that they are the partners of choice for Armenian counterparts,” Kvien concluded.

The U.S. Embassy reiterated the same message when Brendan Hanrahan, Director of the U.S. State Department’s Bureau of European and Eurasian Affairs, visited Armenia this month to follow up on agreements reached with Yerevan at the 8 August summit between the Armenian, Azerbaijani, and American leaders.

Dubbed “Our Stargate” by Armenian Prime Minister Nikol Pashinyan – a nod to President Donald Trump’s own $500 billion AI initiative – the AI “factory” is nothing short of ambitious. Spearheading the project is Firebird AI, a San Francisco and Yerevan-based startup backed by diaspora entrepreneurs, which has partnered with the Armenian government and U.S. tech giant Nvidia. Together, they aim to construct this next-generation data center.

Once completed in 2026, the facility is expected to consume up to 100 megawatts of power in its initial phase, with scalability to support further AI research and applications over time.

While opinions diverge on whether AI constitutes the next industrial revolution, one thing is clear: there is now global competition for countries to adopt and deploy the technology earlier than potential rivals. The European Union has already approved seven AI factories, with more, Armenia’s would be the first in the South Caucasus region, while Nvidia is already partnering with Kazakhstan in Central Asia.

A Google-commissioned study published in March 2025 concluded that South Caucasus and Central Asia continue to lag in AI adoption and innovation, despite the technology’s projected contribution to regional GDP growth. Other reports published last year concluded that meaningful progress will require greater inter-regional integration.

In this context, Nvidia’s involvement is pivotal.

Its Graphic Processing Units (GPUs), initially intended for digital image processing, have become synonymous with AI development. With a market capitalization now exceeding $4 trillion, the company dominates the sector. Nvidia opened its Yerevan office in 2022 thanks to the efforts of the company’s Vice President Rev Lebaredian, a Los Angeles-born ethnic Armenian.

Lebaredian is the nephew of Gerard Libaridian (both share the same surname but with different spellings), a former foreign policy advisor to Armenia’s first president, Levon Ter-Petrossian. Such connections demonstrate how diaspora ties have played a central role in Armenia’s IT resurgence since the late 2000s.

Institutions like the Tumo Center for Creative Technologies, founded in 2011, have already transformed youth education in Armenia and expanded globally. Nvidia’s Lebaredian serves on Tumo’s advisory board. The Afeyan Foundation for Armenia, established by Moderna co-founder Noubar Afeyan – best known for his role in developing the COVID-19 vaccine – is among the early investors of Firebird AI, the Armenian-American startup partnering with Nvidia and the Armenian government on the AI Factory initiative.

Yet Armenia’s technological prowess predates these recent developments. Often dubbed the “Silicon Valley of the Soviet Union,” the country played a pivotal role in computing, electronics, and software development during the Cold War. Following independence, however, Armenia’s landlocked geography – compounded by closed borders with Turkey and Azerbaijan – posed significant barriers to trade and technological exchange. In response, successive governments prioritized the revival of the tech sector since the late 2000s, recognizing that digital industries could flourish without reliance on physical trade routes.

Between 2008 and 2017, the IT sector’s grew from $96 million to $765 million, attracting such U.S. tech giants as Synopsys and Microsoft. More recently, the 2022 influx of Russian IT professionals fleeing conscription or a sanctions-hit economy has provided an additional boost. In 2023, Armenia’s IT sector reached $2.12 billion.

If managed correctly, Armenia’s emerging AI factory could embed Armenia within global digital supply chains. Yet the project’s success hinges on vast energy resources, high-speed fiber-optics, and cross-border cooperation. Green Energy Corridors could also offer a viable solution, but political instability, energy constraints, and regional volatility could relegate the initiative to paper.

Most important, Washington increasingly views Armenia as a potential partner.

Earlier this year, the two countries signed a Strategic Partnership Charter that specifically includes cooperation on AI and semiconductors. At the recent Trump-brokered trilateral summit in Washington, two of the three memoranda of cooperation signed between Yerevan and Washington focused on AI, semiconductor development, and energy security – critical areas given U.S. export restrictions on advanced technologies, especially in AI and civilian nuclear use.

Armenia’s aging Soviet-era Metsamor nuclear power plant is slated for decommissioning by 2036. In response, the government is Small Modular Reactors (SMRs) as a replacement, linking energy modernization to its digital ambitions. Prime Minister Pashinyan favors SMRs, calling the American technology “politically appealing” as a means of reducing dependence on Russia. One Armenian analyst, Areg Kochinyan, has even proposed obtaining nuclear fuel from Kazakhstan to diversify Armenia’s energy security.

These developments coincide with progress toward normalizing relations between Armenia and Azerbaijan. The recent White House meeting – where three memorandums were signed – was specifically geared towards this process. Simultaneously, the U.S. and Azerbaijan signed a memorandum to develop a Strategic Partnership Charter that includes future AI partnerships. If successful, normalizing relations between Armenia and Azerbaijan could also lead to the long-awaited opening of Armenia's border with Turkey.

In anticipation, Armenian and Turkish officials met in Istanbul in late June to discuss energycooperation. During the last normalization attempt in 2009, Ankara and Yerevan signed an electricity supply agreement. Today, only a small amount of power is believed exported from Armenia to Turkey via Georgia. Armenian opposition figures claim the government is preparing to import electricity from Turkey and gas from Azerbaijan in case relations with Moscow deteriorate further and the country faces energy shortages from Russian-managed facilities.

Yet these developments are not occurring in a vacuum. Armenia’s energy sector is in flux as the government attempts to nationalize its electricity distribution network, currently owned by Russian-Armenian businessman Samvel Karapetyan, now in pre-trial detention on charges of planning a coup. Some allege that snatching the power grid away from Karapetyan is necessary for the AI Factory to proceed. Political uncertainty could also deter foreign investment, though it has not dissuaded Nvidia. Meanwhile, Azerbaijan is forming its own tech partnerships, and Georgia continues to position itself as a regional logistics hub.

Nonetheless, the potential for future cooperation with Turkey, Central Asia, and even Azerbaijan is still there, including in green energy. While Armenia and Turkey relations remain strained, with closed borders and a long history of mistrust, technology may offer a less problematic space for engagement. If normalization proceeds, Armenian companies could pursue cross-border partnerships in education, agricultural technology, and combatting climate change – sectors with mutual benefits.

Security concerns, however, loom large. AI has already been weaponized -- whether directly in terms of actual munitions or through massive online disinformation campaigns. In a June interview, however, when asked whether an AI factory could strengthen Armenia’s defense industry, Firebird’s co-founders Razmig Hovaghimian and Alexander Yesayan stressed that U.S. technologies such as Nvidia’s are subject to export controls and cannot be repurposed for military applications.

Across the Caspian, Armenia has the potential to strengthen ties with Central Asia’s growing digital market. Kazakhstan, Uzbekistan, and Kyrgyzstan are actively exploring AI in governance, fintech, and education. Armenia’s Nvidia-powered AI facility could complement these efforts by offering GPU processing power to regional firms and universities – or drawing on theirs when needed. In a region dominated by Russia and China, a South Caucasus and Central Asia partnership built on U.S. technology could provide more strategic breathing room.

Yet perhaps the most transformative possibility lies closer to home. If Armenia and Azerbaijan finalize a peace agreement, new opportunities for digital cooperation could emerge. Baku, flush with energy revenues, is investing in smart villages, e-governance and renewable energy – resources that could help meet Armenia’s AI energy demands. Armenia, in turn ,could offer complementary skills and networks in educational and technological spheres.

The symbolism would be profound: the two former adversaries using cutting-edge technology to build a more stable regional future. Realistically, such cooperation would require sustained political trust but could also help cultivate it. By its nature, AI is forward-looking. Armenia’s challenge is to build partnerships that complement rather than compete, transforming rivalry into collaboration and relegating past mistrust and conflict to history.

Onnik James Krikorian is a journalist, analyst, and consultant from the United Kingdom based in Tbilisi, Georgia, since 2012. From 1998 until then he was based in Yerevan, Armenia, covering issues related to democracy, society, and conflict. In 1994 he first visited Karabakh as a journalist and photographer, also covered the August 2008 war between Georgia and Russia, and consulted for intergovernmental organisations on countering violent extremism. He writes news and analysis for international media and various analytical publications. He can be followed on X at @onewmphoto.