The Next AI Success Story Might Be Nepal

In the United States, the AI boom is bringing on unprecedented levels of wealth and productivity. It appears that a similar trend is happening in other parts of the world.

In 2025, Nepal exported more than $1 billion in I.T. services for the first time, The Kathmandu Post reported earlier this year. This is more than double the amount it exported only three years ago, according to the Post, with growth driven by an influx of software development, I.T. and AI services, and “home loan data processing for Australian companies.”

By Western standards, $1 billion in I.T. services is not especially impressive and is comparable to the value of a small tech startup. But for Nepal, whose GDP is about $45 billion (or $1,550 per capita) and whose top economic sectors are tourism and remittance payments from expats, the feat is impressive. 

The growth of the country’s tech sector is not surprising to Pukar Hamal, CEO of SecurityPal. “I think we’re at the very early parts of a hockey stick curve here,” he tells Reason. 

Entrepreneurs like Hamal, a Nepali immigrant now living in San Francisco, are an important factor in the country’s upward trajectory. Since launching in 2020, SecurityPal—which helps automate the due diligence process of commercial transactions—has quickly found success with an impressive roster of clients, including OpenAI and Grammarly. In 2025, Hamal decided to expand the company’s operations by opening an office in Kathmandu, Nepal’s capital city, which employs close to 200 people.

Despite the country’s success in 2025, Hamal says Nepal “is a little bit behind” and needs “to play catch-up.” 

Some of this catching up is underway through an initiative called Silicon Peaks. This “ecosystem,” as Hamal calls it, aims to attract investment into Nepalese tech companies, give Western firms a faster path to access Nepal’s talent market, and recruit outside corporations to expand their footprint in Nepal, which can be very beneficial to their operations. 

By opening an office in Nepal, companies can tap into a rich pipeline of workers who have received a Western education—many students from the country’s STEM-focused education system go on to study at American universities. And with 42 percent of the global population and 35 percent of its GDP only a direct flight away from Kathmandu, the country’s location is hard to beat.  

Nepal’s natural resources also give firms an answer to some of the energy and water concerns, however unfounded they might be, that dominate the data center discussion in the U.S. and other Western nations. Thanks to its unique topography and climate, Nepal’s power grid runs almost exclusively on carbon-free hydropower, which is a fraction of the cost of electricity produced in the United States.

“It’s a country that’s sort of flush with water,” says Hamal. “It almost has too much water.” 

Regardless of these factors, Nepal’s data center industry is still in its infancy. Kathmandu currently has 10 operational data centers, according to Data Center Map, all of which are only a couple of megawatts in size. Given Nepal’s lack of computing power or need, the growth of its data centers will probably be contingent on satisfying regional demand from its neighbors, China and India.

Still, Nepal’s potential seems to be resonating with investors and Fortune 500 firms such as Coca-Cola and Mastercard, which have tech operations there today. Meanwhile, over $200 million “has been deployed directly into Silicon Peaks companies,” according to the initiative’s website. 

Tech investments aside, the country’s transition to a more market-oriented economy is reason enough to feel optimistic about its future. 

Last year, the U.S. Department of Government Efficiency severed nearly $330 million worth of USAID funding to the country, a large chunk of which had gone to sexual health nonprofits and farming projects. While the funding cuts have had real, negative impacts on some people, the economy as a whole seems to be responding positively: From July 2025 to April 2026, average inflation reached 2.39 percent, down from 4.57 percent over the same period a year prior, according to Nepal News. Exports and imports also increased, but so too did prices, which rose to 4.47 percent (up from 3.39 percent a year earlier). 

As its economy is looking up, Nepal’s political future is too. In March 2026, the country voted out the ruling communist party—one of many leftist parties that have had a grip on Nepalese politics for years. In its place, the more market-friendly, left-of-center Rastriya Swatantra Party has come into power, promising to weed out corruption and increase Nepal’s exports of tech services. 

“I’m hoping that the taste of [the] free market, compounding growth, [and] technology-driven economic growth—which can happen quite rapidly, if you play your cards right—will help the country see that they don’t need to embrace this communist system,” says Hamal. 

Indeed, if you ask any entrepreneur—or almost any historian—they’ll tell you that when a country embraces free markets and shuns central planning, its citizens and economy benefit. Nepal’s not a tech giant—at least not yet—but its trajectory is encouraging and seems to indicate the tiny country could punch well above its weight in the AI era.