The demand for data centers in the region hasn’t gone anywhere — but those scoping out projects have. They’re eyeing up locations further eastward that are in less close proximity to an active warzone.
“We see Asia's AI data center expansion getting even stronger in the coming years, especially in Southeast Asia, Japan, and Australia as hyperscalers could divert projects from the Middle East towards Asia,” said Maheshwari.
Not everyone is so convinced, though. The recent instability in the Middle East hasn’t fundamentally changed the investment calculus for data centers, said Mark Whyte, global head of built environment and infrastructure at Control Risks, in an interview with Tom’s Hardware Premium .
“There has been direct impact on, I think at least one data center that has been hit by a drone, but overall, we see no slowdown in activity,” he said. “If anything, the volumes of work are only up.”
That rosy outlook isn’t echoed by everyone. “Whether or not the current ceasefire holds, it has threatened the region’s economy, supply lines and facilities, and could yet squeeze investment not only in the region but also abroad,” reckoned Cox.
Whyte doesn’t dispute the potential for foreign backers to have second thoughts — but said that wouldn’t necessarily have a massive impact on the broader direction of travel. “It may well have an impact on some of the external investment, but I wouldn't see that as being a long-term impact,” he said.
Even if projects continue, the price of building them may change, though. The biggest, most strategically important projects may still go ahead because they are backed by governments with long-term horizons and deep pockets. But marginal projects that rely on external debt, cautious institutional investors, or multinational customers that have other options could become harder to justify.
Part of the reason that work is continuing on projects in the Middle East is the calculus by those within the region that this is a short-term instability and that AI — and the need to power it using data centers — is so consequential that they are going full steam ahead regardless. “Countries like Saudi Arabia are looking well ahead of this, rather than reacting in a tactical way,” said Whyte.
That doesn’t mean they’re being naïve, though: drones, bombs, and missiles are flying, and that’s indubitable. As a result, protecting those data centers is all important. “From a risk and resilience perspective, I think you have to look at the threats and risks to data center networks as a military planner would,” said Whyte.
And for those who have been engaged in the idea of being central to the global data center sector for close to a decade now, there’s little reason to back off much.
Saudi Arabia is not treating the conflict as a reason to back away, Whyte argued, but as a risk to manage while it pursues a longer-term strategic goal. “The Saudis in particular, see themselves as a global powerhouse for this type of thing going forward, and how they're trying to position themselves to the future,” he said. “It may well have an impact on some of the external investment, but I wouldn't see that as being a long-term impact.”
Chris Stokel-Walker is a Tom's Hardware contributor who focuses on the tech sector and its impact on our daily lives\u2014online and offline.\u00a0He is the author of How AI Ate the World, published in 2024, as well as TikTok Boom, YouTubers, and The History of the Internet in Byte-Sized Chunks. ","collapsible":{"enabled":true,"maxHeight":250,"readMoreText":"Read more","readLessText":"Read less"}}), "https://slice.vanilla.futurecdn.net/13-4-23/js/authorBio.js"); } else { console.error('%c FTE ','background: #9306F9; color: #ffffff','no lazy slice hydration function available'); } Chris Stokel-Walker Freelance Contributor Chris Stokel-Walker is a Tom's Hardware contributor who focuses on the tech sector and its impact on our daily lives—online and offline. He is the author of How AI Ate the World, published in 2024, as well as TikTok Boom, YouTubers, and The History of the Internet in Byte-Sized Chunks.
Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/tech-industry/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/the-middle-east-had-everything-data-center-builders-and-hyperscalers-could-wish-for-then-the-iran-war-happened#main
- https://www.tomshardware.com
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Informational only. No financial advice. Do your own research.