The Middle East’s wealthiest Gulf states are continuing to expand their artificial intelligence and data center infrastructure despite growing security risks linked to the conflict between the United States and Iran.
In the United Arab Emirates, state-backed companies are pressing ahead with plans for a major artificial intelligence campus in Abu Dhabi that is expected to eventually provide up to five gigawatts of computing capacity. People familiar with the project said additional measures were introduced to protect workers during the height of the conflict, but construction activity has continued.
Saudi Arabia is also moving forward with its ambitious plans. Humain, an artificial intelligence company backed by the Public Investment Fund, is preparing to raise an initial $2.5 billion from domestic and international investors to finance data center development across the kingdom, according to people familiar with the plans.
The company is targeting more than six gigawatts of computing capacity and has maintained that its expansion program remains on schedule despite the ongoing regional instability.
Gulf States Maintain AI Infrastructure Ambitions
The projects are a major part of the UAE and Saudi Arabia’s efforts to diversify their economies beyond oil and gas. Both countries are investing billions of dollars in artificial intelligence, cloud computing and digital infrastructure while promoting themselves as destinations offering large amounts of land and relatively abundant energy.
However, the scale of these projects also makes them dependent on major international technology companies, including OpenAI, Microsoft and Nvidia. Those companies now face greater security risks and potentially higher operating costs as military tensions continue across the Gulf.
The risks became increasingly visible this year.
Satellite imagery released in July showed damage at two Amazon data centers in Bahrain after Iran said it had launched missile strikes against the facilities. A spokesperson for Iran’s Islamic Revolutionary Guard Corps described the targets as a major information-processing asset belonging to the enemy.
The incidents followed drone-related damage to three Amazon Web Services facilities in the UAE and Bahrain in March. Amazon has subsequently warned customers that parts of its regional network remain affected.
Technology Companies Continue Gulf Expansion
Despite the security concerns, some major U.S. technology companies continue to expand their presence in the region.
Amazon recently announced that it plans to make up to 50 megawatts of capacity available in Saudi Arabia’s first AI Zone by 2028 as part of an expanded partnership.
Microsoft has also confirmed that its Saudi Arabia East data center region is expected to become available to customers in November 2026.
The companies have otherwise made limited public comments about the broader impact of the conflict on their Gulf expansion plans.
The UAE has also benefited from changes in U.S. technology export policy. Earlier this year, the administration of President Donald Trump eased certain restrictions affecting the Gulf state, allowing selected companies, including Abu Dhabi-based G42, to purchase advanced artificial intelligence chips without having to obtain individual U.S. approvals for every transaction.
G42 is a key force behind the planned Abu Dhabi AI campus.
Khazna, the G42-backed data center developer responsible for delivering infrastructure for the campus, said the project remains on schedule. The company expects to deliver the first 200 megawatts of capacity during the fourth quarter.
“We have not seen any slowdown in customer demand or confidence as a result of the recent regional events,” Khazna said in a statement.
Security Costs Could Rise
The continuation of construction does not mean the conflict has eliminated concerns among investors and technology companies.
The United States and Iran have engaged in another series of military strikes in recent days, underscoring the possibility that the security situation could remain unstable for an extended period.
Winston Ma, a professor at New York University and an investor in artificial intelligence, said Gulf governments remain committed to building the infrastructure, but international technology companies may take a more cautious approach.
“Most likely, the hyperscalers are going to hedge their global map of data center connectivity,” Ma said.
He warned that Gulf sovereign wealth funds could finance data centers and provide the required energy, but without long-term commitments from major Western cloud providers and clearer alignment with U.S. regulations, some large-scale projects could struggle to attract enough computing demand.
Security experts say physical protection could reduce some of the risks posed by drones and missiles, although doing so would add to construction costs.
Estimates from Integrated Security Systems suggest that strengthening data centers with additional protective measures could increase project costs by roughly 5% to 7%.
“There is now a higher perception of physical risk as data centers are no longer just viewed as IT assets, they are regarded increasingly as critical infrastructure that could be targeted during a threat,” said Jane Mason, chief executive of Integrated Security Systems.
The company provides security products including ballistic and blast-resistant panels.
Stargate UAE Faces a Changing Landscape
The Abu Dhabi campus is also closely linked to OpenAI’s international infrastructure ambitions.
Last year, OpenAI announced that one gigawatt of capacity at the Abu Dhabi campus would host Stargate UAE, the first international location of the company’s flagship infrastructure joint venture.
OpenAI has since scaled back some of its international Stargate plans and removed the Stargate branding from newer projects.
The company said it continues to make progress on infrastructure and AI adoption priorities in the UAE but declined to provide further details.
The first phase of the UAE-U.S. AI Campus is also reportedly no longer using the Stargate name.
Gulf Capital Remains a Major Force
Despite the security concerns, the financial importance of Gulf investors to the global AI industry could make it difficult for international technology companies to significantly reduce their exposure to the region.
In July, Abu Dhabi-based MGX raised $49 billion for one of the largest funds ever dedicated to artificial intelligence investments.
Gulf-backed entities have also emerged as major financial supporters of companies such as OpenAI, Anthropic and SpaceX, giving the region a significant role in the global technology ecosystem.
Assad Noori, JLL’s head of data centers and work dynamics for Europe, the Middle East and Africa, said the biggest challenge facing the sector may ultimately be regulatory rather than commercial.
“The more relevant consideration isn’t commitment, but U.S. export-control policy on advanced chips, which has already shaped what can be deployed and by whom,” Noori said.
Advanced AI processors remain subject to U.S. export controls, making access to cutting-edge chips a critical factor in determining how quickly Gulf data centers can scale.
Investors Take Different Approaches
Some private equity investors remain confident that demand for data centers across the Gulf will continue to rise. One major private equity group said it expects regional demand to grow and is actively searching for data center assets that could be acquired now and sold at higher valuations in the future.
Jacopo Pichelli, managing director at FTI Capital Advisors, which advises data center operators in the region, said local investors have largely remained committed despite the changing security environment.
International investors, however, are taking a more cautious approach.
Pichelli said some foreign investors are moving forward with projects almost as aggressively as before, while others are adopting a wait-and-see strategy.
That divide highlights the central challenge facing the Gulf’s AI ambitions: the region has the money, energy and land needed to build massive computing infrastructure, but the long-term success of those projects will also depend on international technology companies, advanced chip supplies and the stability of the wider region.
For now, construction continues. But as military tensions remain elevated, the Gulf’s ambition to become a global AI hub is increasingly being tested not only by economics and technology, but by geopolitics and physical security.
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