Data centers become frontline targets as Middle East conflict escalates

Data centers are juicy targets. Nowhere is that becoming more clear than in the Gulf.

Why it matters: These centers — fragile and exposed, protected against intruders but not drones and missiles — underpin financial systems, communications and artificial intelligence projects.

• They represent billions of dollars of investment both foreign and domestic, today and tomorrow.

• And they can be held hostage.

Driving the news: Iran struck a handful of data centers in the United Arab Emirates and Bahrain following Epic Fury bombardment from the U.S. and Israel.

• State media later shared a list of "enemy" infrastructure tied to American companies — Amazon, Nvidia and Palantir Technologies among them.

• Multiple outlets described this kind of retaliation as a first. It won’t be the last.

Data centers are juicy targets. Nowhere is that becoming more clear than in the Gulf.

Why it matters: These centers — fragile and exposed, protected against intruders but not drones and missiles — underpin financial systems, communications and artificial intelligence projects.

• They represent billions of dollars of investment both foreign and domestic, today and tomorrow.
• And they can be held hostage. 

Driving the news: Iran struck a handful of data centers in the United Arab Emirates and Bahrain following Epic Fury bombardment from the U.S. and Israel.

• State media later shared a list of "enemy" infrastructure tied to American companies — Amazon, Nvidia and Palantir Technologies among them.
• Multiple outlets described this kind of retaliation as a first. It won’t be the last.

What they’re saying: "The biggest takeaway is that physical resilience was taken for granted for the longest time, even in the Gulf states," Michael Deng, a geoeconomics technology analyst at Bloomberg, told Axios.

• "This huge bet on the Gulf, itself, as this big AI hub outside the U.S. and China is looking, in hindsight, like not a really great decision."

Between the lines: These exchanges aggravate business and digital workload concerns already stirred up by a geopolitically messy conflict.

• "Before now, the thought was, if America gets constipated in its ability to build data centers, we’ll build them with our allies in the Middle East," Constellation CEO Joe Dominguez told Axios at our AI+DC summit.
• "But who’s going to insure a $20 billion facility in the Middle East that can be taken out by a $5,000 drone? That’s the reality we face."

Follow the money: Tehran’s menacing is "highly symbolic and strategic," as it gets at "the heart of the U.S.-Gulf relationship" and where it’s been headed, according to Elisa Ewers, a senior fellow at the Council on Foreign Relations.

• "The 1979 paradigm is clashing against this Vision 2030 paradigm. They’re in direct tension," she told Axios.
• "The targeting of critical and civilian infrastructure is saying: The cost of direct conflict with us is high, there are any number of ways we can raise the costs."

Threat level: Data centers in the U.S. could be vulnerable to physical strikes or cyberattacks, and the Pentagon and other national security agencies don’t have much slack in the system to replace lost capacity, particularly in wartime, other experts told Axios.

• Previous drone scares exposed just how lacking the suburban game plan and countermeasures are.
• Data centers are also attractive targets for sophisticated hackers backed by Iran, China and Russia.
• Nearly 3,000 new centers were under construction or planned across the U.S. as of late 2025.

What we’re watching: How all of the above informs the sci-fi-tinged but very real discussions about data centers in space.