Gulf champions and their Western partners stay on the infrastructure path despite attacks
More than seven months have passed since Iranian drones struck Amazon data centers in the UAE, and another site in Bahrain was damaged by a near miss, while Houthi attacks on Saudi Arabia continue. Nevertheless, construction on over $100 billion of major AI projects across the Gulf has not stopped. This is good news for Saudi Arabia, the UAE and other Gulf states, which are vigorously trying to redirect their economies to benefit from the growing global demand for AI compute power.
But there is a latent risk: major Western compute providers may reassess the Gulf's long-term viability as a primary compute hub, especially if Iran follows through on its threats to ramp up attacks on the infrastructure of Western firms it deems complicit with the United States and Israel. Iranian officials have renewed these threats in recent weeks; parliamentary speaker Mohammad-Baqer Qalibaf warned on X against creating a "Persian Gulf Data Authority" to punish countries that cooperate with AI companies the Iranian regime regards as partners in military operations against Iran. In March, the Iranian Revolutionary Guard released a list of 18 potentially targeted companies, including U.S. tech giants and the Emirati firm G42.
On-the-ground risk assessment:“At the start of the year, I described the Middle East as one of the strongest data-center markets, two or three steps ahead of Europe in growth momentum,” says Taher Gouk, an independent digital-infrastructure advisor specializing in the Middle East, to Enterprise AM. “Now, with the various geographic risks, we need to wait and watch.”
Egypt, by contrast, sees an opportunity to carve out a share of the Gulf market, with Hassan Allam Digital Infrastructure and A15 leading after they announced last summer an initial capital commitment of $400 million to target the data-center market.
Field facts:Direct Iranian drone strikes hit two Amazon Web Services sites in the UAE and a third in Bahrain was damaged by a near miss in the early days of the conflict, causing structural damage, power outages and fires, according to the cloud provider's service board. A second site in Bahrain was damaged in April. In a September update, Amazon said it was unable to restore cloud services in Bahrain and parts of the UAE, noting it is "working to replace the affected infrastructure in the UAE and will provide a update on service restoration in the coming months." In Bahrain, Amazon exhausted all options to recover data for customers who had not migrated before the outage, promising an additional update in early 2027.
Construction continues:Nevertheless, Gouk and other analysts say construction on major projects exceeding $100 billion across the Gulf has generally proceeded without wide stoppages, despite intermittent fighting waves and a sharp rise in insurance costs. Some delays stem from supply-chain issues, many of them due to the massive scale of global data-center construction. Others are due to the closure of the Strait of Hormuz, as reported by The Register from BCS Consulting.
Risk distribution:The UAE is reviewing plans for the giant Emirati-American AI Campus, a 5-gigawatt complex led by G42, to make it more geographically distributed, according to Reuters. The non-final plan outlines a network of data centers across the country instead of a single 26-square-kilometer campus in Abu Dhabi, making disruption by drone or missile strikes harder. The plan is not expected to affect the UAE's "StarGate" first phase, a 1-gigawatt facility with a $30 billion investment that is already under construction.
Message of "business as usual":Gulf AI leaders are seeking to affirm that the situation is "business as usual": the UAE's StarGate campus will deliver the first 200 megawatts of compute power in Q4 2026, according to Khazna, G42's data-center arm, Bloomberg. Microsoft's Eastern Saudi Arabia region will open to customers in November, and Amazon plans to provide up to 50 megawatts in the first Saudi AI zone by 2028, Bloomberg also reported. The Saudi LEAP conference, which closed on 3 September, saw more than $15 billion in launches and agreements on its first day alone, including new partnerships and expansions with Amazon, Microsoft and other Western tech giants. UAE ambassador to Washington, Yusuf Al-Atheeba, pledged in a letter to the UAE-US Business Council that work is proceeding despite challenges: "Our commitments to the United States are steadfast, our major investments are progressing, and expanding access to advanced technologies opens broader opportunities."
Some Western partners also reflect stability: Microsoft led the group with a September announcement of plans to invest more than $10 billion in Gulf technology by 2030, including $2 billion in new commitments focused on cloud infrastructure and AI. Amazon Web Services CEO Matt Garman told Forbes in April that his company "remains highly optimistic about our partnerships in the Middle East and the region's long-term potential." The Trump administration gave the region a boost in July with new export rules that allow G42 and its cloud arm Core 42, as well as U.S. firms operating in the UAE, to access advanced AI chips without export licences.
Complex relationship:The relationship between U.S. tech giants and Gulf AI leaders is "unusually close," encompassing multiple multi-billion-dollar deals, which makes disentanglement "very difficult, if not impossible," during crises. OpenAI and Oracle, for example, are slated to operate the UAE's StarGate built by G42 with partners including Nvidia, Cisco and SoftBank in a deal approaching $30 billion. Yet companies overall have remained silent about additional investment plans for the Gulf's post-commitment infrastructure. U.S. firms such as Amazon, Google, Microsoft, Cisco and Nvidia have either declined to comment or have not responded to inquiry requests. "I think many companies are in a wait-and-see mode," says Sam Winter-Levy, senior AI and geostrategy researcher at the Carnegie Endowment for International Peace. "Data-centers are easy targets. They are large, distributed industrial facilities. They appear on Google Maps. Protecting them from drones is difficult."
The next equation: will foreign firms make additional investments in the Gulf's AI infrastructure? The answer depends on balancing the risk of renewed fighting against the Gulf's clear advantages as a compute provider, Gouk says. "I have heard from several international data-center developers that their boards have become more cautious about committing to additional investments," the source quoted, though the sentence is truncated, but the trend is clear: caution is rising, construction continues, and the equation remains unresolved.