US puts Big Tech AI investments in Gulf states in the line of fire

Billions of dollars of US technology infrastructure and trillions more in planned AI investment are now exposed to active conflict in the Gulf as undersea fiber-optic routes run through two simultaneous war zones. Amazon, Microsoft and Google have built data centres across the region to anchor a new AI hub, but the undersea cables that connect those facilities to Africa, South Asia and Southeast Asia run through the Red Sea and the Strait of Hormuz—both effectively closed to commercial traffic after the war that began on February 28.

"Closing both choke points simultaneously would be a globally disruptive event," Doug Madory, director of internet analysis at network intelligence firm Kentik, told Rest of World.

The security threat is multilayered. Iran’s Islamic Revolutionary Guard Corps declared the Strait of Hormuz closed on March 3, threatening to “set ablaze” any vessel attempting passage; at least five tankers have been damaged and roughly 150 ships are stranded around the strait. In the Red Sea, Houthi militants announced they would resume attacks on shipping in solidarity with Iran, ending a ceasefire that had held since late 2025. About 17 submarine cables pass through the Red Sea, carrying the vast majority of data traffic between Europe, Asia and Africa; additional cables serve Iran, Iraq, Kuwait, Bahrain and Qatar through the Strait of Hormuz.

• US investment pledges from a May tour by President Donald Trump totalled $2.2 trillion.
• Amazon committed $5 billion to an AI hub in Riyadh with Saudi Arabia's Humain.
• OpenAI, G42, Oracle, Nvidia and SoftBank announced Stargate UAE, a planned 5-gigawatt AI campus in Abu Dhabi.
• January 2026’s Pax Silica initiative focused on keeping advanced semiconductors away from China.

Analysts warn the region’s data infrastructure was not built for this kind of kinetic threat. "US government and industry leaders have prioritised expansion over kinetic risk mitigation, reflecting how AI development is outpacing national security doctrine," Sam Zabin, a fellow at the Center for Strategic and International Studies, told Rest of World. Kristian Alexander, a senior fellow at the Rabdan Security and Defence Institute in Abu Dhabi, said: "This does not necessarily introduce a new risk so much as it validates what was already in every serious threat model."

The threat is not purely hypothetical. Drones struck three AWS data centers over the weekend, two in the UAE and one in Bahrain, and AWS advised customers to consider migrating workloads out of the Middle East entirely, warning the regional operating environment "remains unpredictable." Kentik data shared with Rest of World shows internet traffic into Iran collapsed on February 28 and has remained near-zero, with the country’s three largest networks—MCCI, MTN Irancell and TIC—dropping to negligible levels.

Past incidents underscore the repair challenge: in February 2024 three Red Sea cables were cut by the dragging anchor of a cargo ship struck by a Houthi missile, disrupting 25% of traffic between Asia, Europe and the Middle East; one cable took five months to repair because vessels could not safely access the area. Doug Madory noted a deliberate strike on cables would be risky for Iran, but accidental damage or collateral strikes could still cause long, widespread outages.

Looking ahead, experts say Washington must integrate Gulf data infrastructure into regional contingency and security planning with the same priority given to oil. "The security frameworks underpinning the US‑UAE AI partnership appear to have focused on supply chain control and geopolitical alignment, not on physical defense during high‑intensity conflict," Ali Bakir, an assistant professor at Qatar University, told Rest of World. Ryan Bohl of RANE Network added: "The structural advantages have not yet changed, although the story is still being written." For now, billions in deployed capital and trillions in pledged AI ambitions hang on whether repair crews can safely access the Red Sea and Hormuz—or whether new security arrangements are built fast enough to protect them.