The Gulf’s AI Boom Has an Undersea Cable Problem

The Gulf's ambitions to become a hub for artificial intelligence are surprisingly dependent on something fragile: a handful of undersea cables that traverse some of the world's most volatile waterways. Countries like Saudi Arabia and the UAE have invested heavily in building AI infrastructure, attracting major hyperscalers and positioning themselves as future exporters of compute capacity. However, as the region transitions from oil wealth to AI-driven economies, the infrastructure carrying that data is increasingly becoming a strategic vulnerability.

Undersea cables have long powered the global internet, but now they are becoming geopolitical assets. Following the escalation between the US, Israel, and Iran earlier this year, experts warned that regional conflict could threaten critical cable infrastructure in the Gulf. In May, media reports claimed Iran was considering taking control of all seven undersea cables running through the Strait of Hormuz.

The importance of these cables cannot be overstated. Undersea cables carry an estimated 95 percent of all international data traffic, and for the Gulf, the problem is concentration: much of the region's connectivity to Europe and the US still depends on just a few routes through the Red Sea and the Strait of Hormuz. A damaged cable could do far more than slow internet speeds - it could undermine the Gulf's entire emerging AI business model.

In many ways, Gulf countries are attempting to transform energy wealth into AI infrastructure, exporting compute power and cloud capacity much like they once exported hydrocarbons. For economies in the Middle East, which are gearing up to become large-scale exporters of compute capacity, the importance of and reliance on these cables is growing. Hyperscalers setting up shop in the region demand higher-than-ever resilience.

"Hyperscalers and regional carriers are pushing diversification because their requirements have moved beyond bandwidth," says Imad Atwi, partner at management consulting firm Strategy& Middle East. "They now need multiple independent paths, predictable latency, and survivability during geopolitical stress." The pressure is mounting, as evidenced by a 2025 incident in which two cables linking Europe to the Middle East and Asia were cut in the Red Sea, degrading internet connectivity across the Gulf for days and causing an estimated $3.5 billion in damages from lost services. The Gulf, by comparison, remains heavily dependent on a narrow concentration of routes.

"Hyperscalers now want similar route diversity across the Middle East, both for Gulf-Europe connectivity and for Europe-Asia traffic transiting the region," says Bertrand Clesca, partner at subsea cable specialists Pioneer Consulting. To address this, a multilayered strategy is emerging across the Gulf, involving new subsea-terrestrial systems, terrestrial fiber corridors, and northern overland corridors through Iraq, Syria, and Turkey.