Gulf AI buffering, but on-stream

The US war on Iran has delayed the build-up of AI infrastructure in Dubai and across the wider Gulf region. A return to normalcy will be influenced by whichever (Iran-bashing) government ultimately comes to power in Israel in the weeks or months to come, and results of the US midterm polls next week. But outcomes favourable to resolution will still have to work around Gulf countries rebuilding their energy infrastructure, delaying planned AI infra in the UAE, Saudi Arabia, Qatar, Bahrain, Oman and Kuwait. These countries were approaching AI from a strong fiscal position that has been impaired by conflict. Even if they push ahead, material and manpower shortages could require prioritising ports over data centres. Iran's drone attacks on tech facilities will shake foreign investor confidence. But fundamentals of an AI-driven, post-hydrocarbon future remain firm.

Gulf countries have sovereign capital pushing AI that's not seeking an exit. Then there's obvious logic for energy-exporting economies to set up power-guzzling AI hyperscalers. The region is geographically best suited to deliver low-latency communication to Asia, Europe and Africa. Iran's attacks reinforce the strategic push towards a dual-use tech that enhances national security while offering economic diversification.

Project architecture is undergoing a review. Instead of large campuses, AI capacity is shifting to a network of distributed data centres. Facilities are being designed with security. Hardening critical infra will delay AI plans, as will semiconductor export controls. A longer gestation may be worth it for US Big Tech that has substantial investment commitments in partnership with sovereign capital in the region. Money on tap in the Gulf for AI hyperscalers is well received by companies, creating a significant debt boom. They need long-term capital that generational funds are comfortable with. West Asia has made AI the core of its diversification strategy. Geopolitical tension will lengthen the process, but shouldn't derail it.