Iran war casts shadow over Middle East AI investments

The U.S. war with Iran is spilling out across the Middle East, putting AI infrastructure at risk and increasingly raising questions about large-scale investments by American tech firms in the region.

Industry leaders have committed billions of dollars to delivering chips and building data centers in wealthy Gulf nations like Saudi Arabia and the United Arab Emirates (UAE), as the Trump administration has embraced the Middle East as a partner in the AI race with China.

However, AI infrastructure has also become a key target, as Iran has launched strikes throughout the region amid hostilities with the U.S. and Israel.

“This war has been a stark reminder that indeed they’re in a rough neighborhood,” Daniel Silverberg, an adjunct senior fellow at the Center for New American Security, said of tech firms and regional AI players, like the Emiratis.

Middle Eastern countries, which have long been dependent on oil revenues, are increasingly seeking to diversify their economies, with an eye toward technologies like AI.

“They are, I think, over the long term, seeing the writing on the wall for oil, and they see that their geopolitical influence globally is tied to the degree to which they are integral to the oil supply chain,” Chris McGuire, a senior fellow for China and emerging technologies at the Council on Foreign Relations, told The Hill.

“They are trying to basically replace that influence with a place in the AI supply chain,” added McGuire, who previously served as deputy senior director for technology and national security at the National Security Council under former President Biden.

While the Biden administration had some reservations about the region’s ties to China, President Trump has fully embraced the Middle East on AI since taking office.

Trump’s first major international trip of his second term was a tour of the Gulf states, including Saudia Arabia, Qatar and the UAE, where he unveiled a spate of tech investments and agreements.

Silicon Valley showed up in force in Riyadh, with Tesla CEO Elon Musk, Amazon CEO Andy Jassy, OpenAI CEO Sam Altman, Nvidia CEO Jensen Huang, AMD CEO Lisa Su, Palantir CEO Alex Karp and others accompanying the president.

Nvidia and AMD both announced high-profile deals with Humain, an AI firm created by Saudi Arabia’s sovereign wealth fund. Nvidia said it would send 18,000 of its most advanced Blackwell chips to Riyadh, while AMD announced a $10 billion partnership with Humain.

In the UAE, Trump unveiled plans to build a massive data center campus in Abu Dhabi. OpenAI later said it was teaming up with Emirati AI firm G42, as well as Nvidia, Oracle Cisco and SoftBank to build a 1-gigawatt cluster referred to as Stargate UAE.

When Saudi Crown Prince Mohammed bin Salman visited Washington in November, tech leaders gathered once again and unveiled more deals. Humain announced it was expanding its partnership with Nvidia, with plans to deploy up to 600,000 chips, as well as a new agreement with Elon Musk’s xAI to build a network of data centers.

Gartner, a research and advisory firm, projected last August that IT spending in the region would top $155 billion in 2025 and rise further to about $169 billion in 2026.

“The Gulf presents an incredible market opportunity, and it’s not just about the Gulf,” Silverberg said.

“[U.S. tech companies] are looking at global opportunity because the platforms that UAE entities like G42 are developing are going to be exported to Africa and Latin America and other key areas of contention with China,” he added.

However, the conflict with Iran has thrown a wrench in the region’s sweeping AI ambitions. After the U.S. and Israel launched strikes on Iran late last month, killing the country’s supreme leader Ayatollah Ali Khamenei, Tehran has hit back at targets across the Middle East.

Three Amazon data centers in the UAE and Bahrain were damaged in drone strikes just days after hostilities got underway. The two Emirati facilities were directly hit, while a drone struck nearby the third facility in Bahrain and caused “physical impacts to our infrastructure,” the company said.

Iranian state media also released a list of offices and infrastructure run by U.S. companies that were considered potential targets Wednesday, including Google, Microsoft, Palantir, IBM, Nvidia and Oracle, according to Al-Jazeera.

“[The Gulf nations] know, for their futures, it’s critical to be diversifying into tech, and they really have created the infrastructure to do it,” Silverberg said, adding, “Iran knows that, and Iran is specifically targeting data centers and their tech infrastructure and their energy infrastructure to hit them where it counts.”

McGuire drew comparisons to the vulnerabilities of the chip supply chain, which is heavily dependent on Taiwan.

China has long had its sights on the self-governing island that is responsible for more than 90 percent of leading-edge chip manufacturing, according to the International Trade Association. Chinese military action against Taiwan could have wide-ranging consequences for global access to chips.

“It wouldn’t make a lot of sense to put large parts of the AI supply chain in places that are also very vulnerable to geopolitical disruption,” McGuire said.

“If you’re a U.S. hyperscaler serving global populations, and you have very large investments in any region that is in missile range of a country that might actually be willing to fire missiles off, I would feel nervous about that,” he added. “These are very, very expensive facilities that are pretty delicate.”

“This is only the beginning of targeting data centers. This is the least important data centers will ever be to the U.S. economy, to the global economy and to military operations, right. It’s only going up from here because AI is getting more important to all of those things.”

However, Gershom Sacks, director of the N7 Foundation, suggested the calculus for tech companies investing in the region hasn’t really changed. The N7 Foundation is an initiative focused on increasing ties between U.S. partners in the Middle East.

He underscored that the Gulf has significant land and capital to put behind these investments, in addition to a stable energy supply and a lax regulatory environment.

“It’s possible that they could think about diversifying, so they don’t have all their eggs in one basket so to speak. But really, in the long term, I think they’ll continue to partner with the UAE and Saudi on this,” Sacks, who served as Director of Gulf Affairs at the National Security Council under Biden, told The Hill.

Copyright 2026 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Senate Republican rebukes Carr’s threats to revoke broadcast licenses over ...

Maher swipes at Trump over Iran war: ‘I don’t understand’ why US can’t ...

Trump administration offers $10M reward for information on Iranian leaders

Trump raises Democratic attacks by downplaying high fuel prices sparked by Iran ...

Jimmy Kimmel takes swipe at ‘Melania’ documentary at Oscars

Why the newest dimes are missing a symbol of peace in the US

Trump snarls GOP’s midterm message 

‘Baghdad Bob’ had nothing on CNN and the far-left media of today   

Trump officials erupt at CNN over report on surprise over Strait of Hormuz ...

US demanding countries assist with ship escorts in Strait of Hormuz: UN ...

Data centers emerge as growing wedge issue in midterm races

The post-boomer GOP is coming — 2028 will define it

Hegseth, Trump face perilous options in the Strait of Hormuz

Trump says Cuba wants to make a deal with the US

Senate Democrat tax plans are more populist slop and ignore national debt

Judge rules Kennedy Center must allow Dem lawmaker to attend board meeting

How soon will clocks ‘fall back?’ This year, as early as possible

Shapiro to Maher: ‘I refuse to take any of your bait’ on 2028 election ...

© The Hill