A pedestrian walks past an anti-American billboard at Enghelab (Revolution) Square in Tehran on Monday (local time). Tensions between the United States and Iran continue as President Donald Trump presses for the opening of the Strait of Hormuz and denuclearization negotiations. [Yonhap]
A pedestrian walks past an anti-American billboard at Enghelab (Revolution) Square in Tehran on Monday (local time). Tensions between the United States and Iran continue as President Donald Trump presses for the opening of the Strait of Hormuz and denuclearization negotiations. [Yonhap]

Data centers — the backbone of the AI era — have emerged as a new target of war, raising alarm over the massive AI investment drives underway across the Middle East. Iran's designation of US tech giants' data centers as legitimate military targets has fueled concern that construction costs, insurance premiums and risk premiums for future AI projects in the region could rise sharply.

Iran's Islamic Revolutionary Guard Corps targeted data centers operated by Amazon, Google, Microsoft and Nvidia from the early stages of the conflict, CNN reported Monday (local time).

An Amazon data center in Bahrain sustained serious damage in an Iranian missile strike late last month. Iran has argued that US companies' data centers are no different from military installations because they provide cloud services to the US military and intelligence agencies.

Amazon Web Services, Google and Microsoft are also participants in a $9 billion Pentagon cloud project. The US military, for its part, struck an Iranian data center as well, underscoring the dual-use nature of such facilities — infrastructure that serves both civilian and military purposes.

Andrew Reddie, a professor at the University of California, Berkeley, told CNN that "data centers can process both military intelligence and civilian services at the same time," adding that from Iran's perspective, an Amazon data center is "in effect no different from a US military installation."

The conflict is also expected to weigh on the ambitious AI hub strategies that Middle Eastern nations have been pursuing.

Saudi Arabia is channeling its sovereign wealth fund — valued at $1 trillion — into building an AI industry, while the UAE is developing a $500 billion data center project with the United States.

Gulf states including Bahrain, Kuwait, Oman and Qatar have collectively announced AI-related investment plans with the US totaling $2 trillion.

But the confirmation that data centers can be direct targets in armed conflict may shift investor perceptions. Analysts say the physical security of data centers is emerging as a new investment variable that could affect the profitability of such projects.

The insurance industry is also watching the geopolitical risks surrounding Middle Eastern data centers closely. Experts forecast that insurance premiums for AI facilities in the region will rise, and that investment risk premiums are likely to expand as well.

The conflict has shown that data centers — once considered core civilian infrastructure and a prized asset in the global AI race — are now strategic facilities directly tied to national security.


sjy@heraldcorp.com