Iran War Threatens to Split AI Boom into Two Separate Markets
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The Iran war has exposed a paradox in the AI boom: Gulf money is underwriting America's effort to win the AI race, but the US has started a conflict that could destabilize those investments.
Some estimates have projected $2 trillion in long-term pledges from Middle Eastern nations to the AI boom, money that now looks precarious.
The conflict appears less likely to kill the AI boom entirely than cleave the market in two, leaving hyperscalers like Alphabet Inc., Amazon.com Inc., and Microsoft Corp. most exposed to the shifting financial landscape.
Upstart AI labs such as OpenAI and Anthropic PBC are more insulated due to their cheaper software play and sticky enterprise contracts.
The AI software makers need data centers to run their businesses, but they're not directly exposed to rising energy costs in the way the owners of those server farms are.
Hyperscalers like Amazon, Google, Microsoft, Meta Platforms Inc., and Oracle Corp. are more at risk given how much their $1.15 trillion buildout relies on cheap, reliable energy, especially natural gas.
The chip supply chain is similarly exposed, with Taiwan Semiconductor Manufacturing Co. (TSMC) facing a months-long wait for chip output to fully recover due to an Iranian drone attack on QatarEnergy's Ras Laffan Industrial City.
Nvidia, the world's most valuable public company, is perhaps the most exposed of all, with its revenue heavily reliant on selling chips to hyperscalers.
