The widening conflict involving Iran is beginning to ripple through the global AI industry, raising new questions about the security of Gulf-backed data center projects and the resilience of regional cloud infrastructure. Gulf states are expected to invest more than US$300 billion in data centers, chips, and other AI infrastructure, but recent drone strikes on Amazon Web Services (AWS) facilities have highlighted the vulnerability of these projects, according to reports by The Information and The Guardian.
Drone strikes disrupt regional cloud services
The attacks underscore how digital infrastructure tied to AI is becoming increasingly entangled with geopolitical tensions. A drone believed to be an Iranian Shahed-136 struck an AWS data center in the United Arab Emirates (UAE) early on March 8, triggering a fire and forcing a shutdown of the power supply. A second AWS facility was also hit, while a third site in Bahrain was affected after a nearby strike.
Disruptions at the three Amazon facilities affected several AWS services in the region and heightened concerns about the security of Gulf-based AI projects. The outages also disrupted everyday services in parts of the UAE, leaving residents unable to access banking, food-delivery, and ride-hailing applications.
The Gulf has emerged as an increasingly important center for AI investment. Saudi Arabia, the United Arab Emirates, Kuwait, and Qatar have invested heavily in land, electricity, chips, and the development of AI models in local dialects, with Nvidia GPUs among the most expensive components. Saudi Crown Prince Mohammed bin Salman recently outlined plans for US$50 billion in semiconductor investment in the near term, while the UAE could spend more than US$30 billion purchasing Nvidia chips through next year based on current market prices.
However, the viability of these investments depends on governments' ability to continue funding and protecting the data centers required to deploy them.
Large-scale infrastructure plans face security questions
The UAE is developing what is expected to be the region's largest AI infrastructure project: a 10-square-mile data center campus designed to consume as much as 5 gigawatts of power. As part of the Stargate project, OpenAI and Oracle are expected to operate about 1 gigawatt of chip capacity at the site.
Saudi Arabia, meanwhile, plans to build data centers consuming up to 6.6 gigawatts of power by 2034, while Elon Musk's xAI is working with Humain to develop a facility expected to use roughly 500 megawatts. Humain CEO Tareq Amin has said the company has secured more than 200 plots of land across Saudi Arabia and is relying on geographic diversity and multiple fiber-optic routes to reduce the risk of service disruptions.
Even so, analysts say the conflict could prompt governments and investors to reassess infrastructure strategy. IDC analyst Stephen Minton said Gulf AI spending is likely to continue in the near term but warned that a conflict lasting several months could lead to a "disruptive pause" in some investments. Security experts have also suggested that large-scale AI data centers in the region may eventually require additional defensive measures, potentially including missile defense systems.
AI increasingly shapes modern warfare
At the same time, AI is playing a growing role in the conflict itself. The Wall Street Journal reported that the US and Israel are using AI tools to help gather intelligence, identify targets, plan bombing missions, and assess battle damage more quickly than in the past. The technology is also being applied to non-combat functions such as intelligence analysis, logistics, and mission planning.
Israeli intelligence agencies are increasingly relying on AI to analyze large volumes of surveillance footage and communications data. The Pentagon is also expanding the use of specialized AI systems for military applications. Retired Air Force Lt. Gen. Jack Shanahan, the Pentagon's first AI chief, said building military-grade AI remains challenging because much of the available training data is outdated or incomplete.
Still, the efficiency gains can be significant. Emelia Probasco, a senior fellow at Georgetown University's Center for Security and Emerging Technology, said the US Army's 18th Airborne Corps used Palantir software to conduct a targeting operation with just 20 personnel, compared with more than 2,000 staff involved in similar operations during the Iraq war.
Together, the developments highlight how AI is increasingly shaping both modern warfare and the infrastructure supporting the global AI industry, placing the Gulf's ambitions to become a major AI hub alongside rising geopolitical risks.
Article edited by Jack Wu
