The Middle East was, until recently, the uncontested next frontier for global AI infrastructure investment. Then war broke out.
The US-Israeli military campaign against Iran, which began in late February 2026, has introduced a layer of strategic uncertainty into a region that had attracted tens of billions of dollars in AI and data centre commitments from Microsoft, Google Cloud, Amazon Web Services, Oracle and a constellation of sovereign-backed entities. The assumption underpinning all of it, that the Gulf offered cheap and abundant energy, stable governments, strategic geographic positioning and enthusiastic policy support, has not collapsed, but it has been significantly complicated.
The most immediate signal came on 28 February, when Iranian drone strikes hit three AWS data centre facilities across the UAE and Bahrain. Two hyperscale facilities in the UAE sustained direct hits, while a third in Bahrain suffered heavy collateral damage. The attacks cut power across multiple availability zones, triggering fires and extended outages that disrupted banking, payments, enterprise and consumer services across the Gulf. Millions of residents in Dubai and Abu Dhabi found themselves temporarily unable to make digital payments or access cloud-dependent services. The Islamic Revolutionary Guard Corps claimed responsibility, framing the strikes as targeting dual-use technology infrastructure.
The incidents forced a question that the regional technology sector had not previously needed to ask: whether data centres require missile defence. Until now, operators and policymakers had focused security planning on perimeter access and cyber threats. State-level drone and missile strikes on concrete infrastructure hosting AI workloads represent a categorically different risk class, and one that legal experts note likely constitutes an unlawful targeting of civilian infrastructure under international humanitarian law.
Beyond the physical damage, the conflict has eroded the energy cost equation that made the Gulf so attractive in the first place. Disruption to the Strait of Hormuz and damage to regional energy assets have driven Brent crude prices sharply higher, weakening the assumption that hydrocarbon-subsidised electricity would continue to underwrite AI campus expansion at scale. The planned 5GW AI hub outside Abu Dhabi, a centrepiece of G42’s sovereign compute ambitions, and Saudi Arabia’s Hexagon data centre at King Abdullah Economic City, a USD 2.7 billion facility targeting 480MW of GPU-dense capacity, both now face heightened scrutiny from investors and insurers recalibrating their risk models for the region.
Yet the picture is not uniformly negative. Technology leaders across the UAE and Saudi Arabia describe the current moment less as a strategic rupture and more as a real-world stress test. “The current situation hasn’t changed our strategy; it has validated it,” one UAE-based CIO told Computer Weekly. The argument runs that geopolitical volatility strengthens rather than weakens the case for sovereign digital infrastructure and local AI ecosystems, reducing dependence on infrastructure located in geopolitically exposed zones.
That logic is already reshaping investment decisions at the margin. Gartner projected regional IT spending would reach USD 169 billion in 2026, and Gulf governments have shown no public sign of retreating from their digital transformation timelines. Saudi Arabia designated 2026 the Year of Artificial Intelligence in March, with SDAIA president Abdullah Al-Ghamdi framing the designation as a commitment to embedding AI as a trusted national capability rather than a discretionary investment. Saudi tech conference LEAP, postponed from April to late August due to the conflict, remains on track with its programme of founders, investors and policymakers unchanged.
The more consequential question is what the conflict does to timelines rather than ambitions. Project delivery requires international contractors, equipment shipments through Hormuz-adjacent logistics corridors, and the willingness of global hyperscalers to deploy capital in a wartime environment. Those variables are now harder to predict than they were in January.
For MEA Tech Watch readers, the practical read is this: the Gulf’s AI infrastructure buildout is not reversing, but it is entering a new phase in which resilience, sovereignty and distributed architecture have moved from aspirational principles to operational priorities, and in which the definition of infrastructure risk has permanently expanded.
