How the Iran War Could Split the AI Boom in Two

The Iran war has laid bare a paradox: Gulf money is helping underwrite America’s effort to win the artificial intelligence race, and now 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. At the same time, surging energy costs threaten to make data centers far more expensive to run. But the aftershocks of the conflict appear less likely to kill the AI boom entirely than cleave the market in two, leaving so-called hyperscalers like Alphabet Inc., Amazon.com Inc. and Microsoft Corp. most exposed to the shifting financial landscape while upstart AI labs such as OpenAI and Anthropic PBC are more insulated.

Investors have long treated the AI bonanza as a single, monolithic story, but in reality it has two distinct elements — a phenomenally expensive infrastructure business, and a cheaper software play. Among the architects of the latter component, Anthropic has been chugging along rather well lately with annualized revenue more than doubling in the last three months to $19 billion, while OpenAI’s is at around $25 billion. Consumers, business clients across finance and life sciences and governments are all paying for subscriptions and access; unlike previous hype cycles around the metaverse and crypto, that momentum looks sustainable.