Trump helped build the Middle East’s AI ambitions. Could his war break them?

Last spring, President Donald Trump made a significant visit to the Middle East, aiming to position the Gulf region as a leader in the global artificial intelligence race. His entourage included prominent tech CEOs such as Sam Altman from OpenAI and Andy Jassy from Amazon, as they collectively envisioned a future for the region driven by commerce rather than conflict. However, the recent escalation of the Iran conflict has led to missile and drone attacks on data centers in the UAE and Bahrain, casting doubt on the stability of Trump's vision and the Gulf's AI aspirations. Countries like the UAE and Saudi Arabia have heavily invested in AI as a means to diversify their economies away from oil dependence. Major American tech companies, including Amazon, OpenAI, and Microsoft, view the Gulf's wealth of energy resources and expansive land as critical for their AI infrastructure development. However, analysts warn that prolonged warfare could jeopardize these plans. Paul Meeks, head of technology research at Freedom Capital Markets, stated, "If it goes on for a couple months, I think you have to reassess just about everything." AI has been identified as a cornerstone of the Gulf states' post-oil economic strategies, with ambitions to become key players in the global AI arena. The investments have already begun to yield results. Research from Gartner predicts that technology spending in the Middle East will reach $155 billion by 2025, with nearly $9.5 billion designated for data centers—a staggering nearly 70% increase from the previous year. During Trump's previous deals, significant partnerships were formed with Saudi Arabia's state-backed AI startup Humain and agreements were reached to establish the largest data center complex outside the United States in Abu Dhabi. However, with the ongoing conflict, Iranian threats against the technological infrastructure of companies like Amazon and Microsoft loom large. These threats extend beyond just cyberattacks, potentially damaging critical facilities that support data operations. The conflict has already affected Amazon's operations, with disruptions reported at their Bahrain data center due to the war. This follows earlier Iranian drone strikes on their facilities in the UAE, resulting in service outages for many digital platforms. To mitigate these disruptions, Amazon has been assisting customers in migrating workloads to other regions. The security of these data centers is now a primary concern, especially as they require substantial water resources for cooling—resources that could be compromised due to attacks on desalination facilities. Nevertheless, if the conflict de-escalates soon, some analysts remain hopeful for the future of AI investments in the region. The Gulf states' significant oil reserves and financial capabilities position them uniquely for AI infrastructure growth. Marc Einstein, a research director at Counterpoint Research, emphasized the resilience of Gulf nations in their technological pursuits. "They’re very resolute that the show is going to go on," he noted. However, the ongoing situation may have altered timelines for these investments. The strait of Hormuz, a crucial shipping route for global oil supplies, is currently under threat, which may push Gulf governments to accelerate their diversification initiatives. As Matt Garman, CEO of Amazon’s cloud division, previously stated, there remains a long-term bullish outlook for investments in the Middle East despite current challenges. Yet, the economic repercussions of the war could significantly impact technology spending, especially if inflation leads to higher financing costs for tech firms. Ultimately, the duration of the conflict will dictate the course of future investment strategies in the region, leaving giant tech companies in a wait-and-see position.