When President Donald Trump returned from a trip to the Gulf in May 2025, he trumpeted $2.2 trillion in bilateral deals the United States had signed with Qatar, Saudi Arabia, and the United Arab Emirates. In addition to defense and economic partnerships, a significant share of those deals addressed artificial intelligence—and, specifically, building American AI infrastructure in the Gulf. The proposition for American technology companies was compelling: abundant cheap energy, access to capital from sovereign wealth funds, lower regulatory barriers for data center construction, and U.S. government approval for previously restricted chip sales. For Washington, the deals offered an opportunity to speed up advancements in American AI capabilities and incentivize the Gulf to partner less with China on AI.

But recent events have revealed a major risk: the infrastructure that such critical technology relies on is under attack, caught in the crossfire of a war it was not prepared for. On March 1, Iran hit two Amazon Web Services data centers in the UAE with a barrage of Shahed drones; an AWS facility in Bahrain was also damaged, likely with debris from a nearby strike. The Islamic Revolutionary Guard Corps claimed the facilities supported U.S. military AI operations, which could make them legitimate targets under the laws of armed conflict. (Although the U.S. military uses AWS, there is no publicly available evidence that these particular facilities supported U.S. military operations, as the IRGC claimed.) The effective closure of the Strait of Hormuz and disruption in the Red Sea also put at risk the submarine cables that carry the vast majority of data traffic between Asia, Europe, and the Gulf.

These campaigns are inflicting serious short-term costs on the users of those networks, both civilian and military. But the bigger problem is that investment in the Gulf is not limited to new bilateral technology partnerships between the United States and a handful of Gulf monarchies. It has also created a web of digital dependencies that now extends to dozens of countries that had no say in the arrangement and no awareness of the risk they were assuming.

The U.S. bet on the Gulf for AI infrastructure was a mistake. By encouraging U.S. companies to build vulnerable and immobile critical infrastructure in the Gulf, Washington gambled on an unstable security environment—often a result, at least in part, of U.S. intervention, including the latest war with Iran. Once digital infrastructure investments are made, the dependencies that develop are hard to reverse: multibillion-dollar physical infrastructure projects cannot simply be turned off, nor can their capital be easily redistributed, particularly when they serve as the foundation for what has become one of the world’s most valuable technologies. The costs that companies, consumers, and U.S. national security interests are now facing are likely to persist, or even rise further. Some projects have already reached this point of no return, and companies will likely have to eat those costs. For investments that are early in the building and planning process, however, tech companies should reconsider their pivot to the Gulf and work with Washington to start bringing projects back to where it is safest and, as energy and other costs rise, increasingly cost competitive—the United States.

SUPPLY CHAIN REACTION

The Gulf hosts roughly 1.5 percent of the world’s computing capacity—about double its share of global population. This may seem small, but its capacity is growing by some nine percent per year. The ambitious deals that resulted from Trump’s 2025 Gulf tour are a significant part of this rapid growth.........

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