AI could deliver a $260 billion economic opportunity to the GCC by 2030, according to a new report from Strategy& Middle East. But the report warns that capturing that value will depend less on trying to control every part of the AI supply chain and more on choosing where the region truly needs sovereignty.
That question has taken on new urgency after drone strikes in March 2026 damaged Amazon Web Services infrastructure in the UAE and Bahrain. AWS said two facilities in the UAE were directly struck, while infrastructure in Bahrain was affected by a nearby strike. The incident exposed how much of the region's digital backbone depends on infrastructure that can be physically vulnerable.
Why the Gulf can't simply go it alone
Much of the technology underpinning AI expansion in the Gulf remains concentrated among a relatively small group of international suppliers. Around 75 percent of global semiconductor manufacturing sits in East Asia, and virtually all leading-edge chip manufacturing below 10 nanometers is centered in Taiwan and South Korea. On the cloud side, the three largest hyperscalers account for roughly 65 percent of the global cloud infrastructure market.
That concentration means no GCC country can realistically build a fully self-contained AI supply chain. Strategy& argues the answer isn't full independence but what it calls pragmatic AI sovereignty: an approach that combines control of strategically sensitive capabilities with continued access to global technology ecosystems.
What pragmatic sovereignty actually means
Chady Smayra, partner at Strategy& Middle East, said: "GCC countries have already made considerable progress in positioning themselves at the forefront of global AI adoption, but the next phase requires a more selective approach to sovereignty."
He added: "attempting to own every component of the global AI supply chain would introduce internal fragility rather than eliminate risk. Instead, Gulf countries should secure access where necessary, retain control over strategically critical capabilities and focus on building global leadership in areas where the region can capture the greatest economic value."
Strategy& breaks the AI stack into five interconnected layers where resilience matters: semiconductors and hardware, physical infrastructure and connectivity, cloud platforms, models and intelligence, and AI systems and their deployment. Three capabilities cut across all five layers, according to the report: talent and human capital, cybersecurity and digital resilience, and data sovereignty and privacy.
Why this matters for Dubai and the wider UAE
For the UAE, where AI adoption has been a national priority and cloud infrastructure sits at the center of that push, the March 2026 strikes on AWS facilities are a reminder that ambition alone doesn't guarantee resilience. Businesses, government agencies, and startups across Dubai and Abu Dhabi that rely on cloud platforms and AI systems built on foreign infrastructure now have a clearer picture of where vulnerabilities lie.