Silicon Valley’s Bad Bet on the Gulf

In May 2025, President Donald Trump announced $2.2 trillion in bilateral deals with Gulf nations focusing on AI infrastructure, involving U.S. defense and economic partnerships.
The agreement attracted American technology companies due to cheap energy, access to sovereign wealth funds, lower regulatory barriers, and U.S. government approvals for restricted chip sales.
The infrastructure supporting this technology is now at risk due to regional conflicts, specifically attacks by Iran on AWS data centers in the UAE and Bahrain using Shahed drones.
The disruption of submarine cables in the Strait of Hormuz and Red Sea threatens data traffic between Asia, Europe, and the Gulf.
The U.S. bet on the Gulf for AI infrastructure is now considered a mistake due to vulnerabilities exposed by recent attacks.
Companies and users of this infrastructure are facing significant short-term and potentially long-term costs and risks.
The framework for Gulf AI build-out, mainly designed for peacetime technology competition, did not adequately prepare for physical security threats.
The situation calls for reassessing current projects’ viability and costs, while planning future investments in more secure locations.
U.S. companies are increasingly relocating sensitive workloads to safer regions and enhancing insurance coverage.
The U.S. government should redirect AI investments to safer regions while reinforcing agreements that serve U.S. economic and national security interests.