The Gulf’s drive to anchor the global AI boom is colliding with the realities of war. Before hostilities escalated between the U.S., Israel and Iran, the UAE, Saudi Arabia and Qatar were courting hyperscalers with cheap energy, sovereign capital and strategic geography to build out data-center capacity. Strikes on AWS facilities in the UAE and Bahrain and a claimed hit on an Oracle-linked site in Dubai have brought physical risk to the fore, while the closure of the Strait of Hormuz and a surge in Brent crude have undermined one of the region’s core advantages: low-cost power. Developers and advisers say investment decisions are slowing or on pause as risk premiums rise for insurance, supply chains and site hardening, including anti-drone defenses and potentially underground builds. Gulf champions G42 and Saudi Arabia’s HUMAIN insist their ambitions remain intact, arguing that scale, resources and full-stack AI strategies will prevail over episodic volatility. Still, analysts say the conflict has punctured the assumption of long-term stability underpinning the Gulf’s AI bet, likely making capacity costlier and slower to deliver. Interest in the region persists, but the path to becoming an AI hub now runs through tighter energy markets and elevated geopolitical risk.
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