A trader works on the floor at the New York Stock Exchange on Monday. Understanding the assumptions that underpin your investments can be just as important as understanding the investments themselves, writes Sam Sivarajan.Brendan McDermid/Reuters
Sam Sivarajan is a keynote speaker, independent wealth management consultant and author of three books on investing and decision-making.
As conflict escalates across the Middle East, markets are absorbing a stream of geopolitical shocks. Oil prices are swinging, supply chains are being stress-tested, and investors are scanning headlines for signals. But the most important story for everyday investors may not be on the front page — it may be the quieter, structural story connecting distant military strategy to the technology stocks in millions of retirement portfolios.
To understand that connection, consider the F-35. It is among the most sophisticated combat aircraft ever built. Yet it has a fundamental dependency: The KC-135 Stratotanker, a slow, unglamorous refueling aircraft that keeps the jets in the air. In the current Gulf conflict, adversaries have learned to ignore the dogfight and target the tankers instead. Disable the systems around it, and the most advanced weaponry in the world becomes an expensive paperweight.
For many years now, the conversation around artificial intelligence has been dominated by the “jets” — the large-language models used to train AI and the breathless announcements about capabilities. What has received far less attention are the “tankers” — the physical infrastructure like data centres and power grids, the water needed to cool them, and the sovereign wealth flowing from the Gulf states into Western technology equities. Each of these pillars is now under pressure.
Microsoft late last year announced plans to invest US$15.2-billion in the UAE between 2023 and 2029, building on its US$1.5-billion stake in Abu Dhabi–based AI firm G42, while G42 and its partners are developing “Stargate UAE” — a planned five‑gigawatt AI campus billed as the largest such complex outside the United States. Saudi Arabia has attracted more than US$20-billion in data‑centre and cloud investment pledges from Oracle, Google, and Amazon. The logic was straightforward: Low‑cost energy, willing sovereign co‑investors, and governments ready to move fast.
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That logic rested on three pillars. First, oil revenues generating the surplus capital that Gulf sovereign wealth funds deployed globally — US$119-billion in 2025 alone, representing 43 per cent of all sovereign deal activity, with heavy flows into U.S. tech and Treasuries. Second, tax exemptions for expats cemented the region as the world’s top destination for international talent and capital. Third, a reputation as a safe, stable platform for global AI ambitions. All three are now crumbling simultaneously.
The Strait of Hormuz – through which roughly 20 per cent of the world’s daily oil supply passes – has been effectively closed to shipping traffic since early March. Qatar has stopped gas production and declared force majeure. The blow to tourism and the expat economy in the region has been equally swift. Airspace closings produced 37,000 flight cancellations in the first 10 days of conflict alone. Dubai’s reputation for safety has been shattered — the iconic Burj Al Arab hotel was struck by drone debris, the Fairmont The Palm luxury hotel was rocked by an explosion, and Dubai’s airport damaged by a missile strike. Tens of thousands of Western expatriates have fled, and major banks ordered staff to work from home. A safe-haven reputation built over decades is not rebuilt quickly once lost.
On March 1, Iranian drone strikes damaged three Amazon Web Services data centres – two in the UAE and one in Bahrain – taking two of the three availability zones (physically separate data center clusters within a single cloud region) offline and disrupting banks, payment services, and enterprise software across the region. Some experts are now calling for data centres to be reclassified as critical military infrastructure, a move that would dramatically alter the economics of Gulf-based AI build-out.
The investment implications are direct. Gulf sovereign wealth funds were a critical prop beneath the valuations of the major AI hyperscalers – such as Microsoft, Amazon, Google and Meta – that dominate global index funds. If those states are now forced to redirect capital to cover domestic fiscal shortfalls – lost oil revenues, reconstruction costs, recession risk – asset repatriation becomes very real. Rather than deploying oil proceeds into U.S. Treasuries and equities, Gulf states may be compelled to sell those same assets to maintain spending at home. That means liquidating their most accessible holdings first: The publicly traded technology stocks that are also anchoring retirement portfolios worldwide.
Here’s the key takeaway for investors: The AI investment thesis does not need to be wrong for portfolios to suffer. It just needs to take longer to play out than anticipated. Barton Biggs spent 30 years at Morgan Stanley, was ranked repeatedly as the top global strategist by Institutional Investor magazine and was widely credited as the architect of the firm’s research and asset management divisions. When he left in 2003 to launch Traxis Partners, it was the largest new hedge fund of that year. In May, 2004, Traxis took a high-conviction short position on oil, betting prices had run too far. The analysis was directionally correct – but oil kept climbing into 2005 and 2006, peaking in 2008 before finally collapsing. Redemptions followed the near-term losses. The fund was damaged not because the logic was flawed, but because the market remained irrational longer than the capital could endure.
The AI build-out faces the same problem. The technology is almost certainly real. The long-term disruption to how we work and invest is not in dispute. But a timeline that slips by two or three years isn’t a minor adjustment in a market priced for rapid returns. It can be the difference between a thesis that works and capital that loses patience first.
None of this is a reason to panic. But it is a reason to ask better questions. Diversification still matters – concentration risk doesn’t announce itself until it arrives. Understanding what assumptions underpin your investments is as important as understanding the investments themselves. And stress-testing your portfolio against a scenario where the AI payoff arrives three to five years later than expected is not pessimism – it is prudence. Whether you work with an adviser or invest on your own, the exercise is the same: Ask honestly whether your financial plan can absorb a prolonged wait for returns the market is currently pricing as imminent.
As the late U.S. General Omar Bradley observed, “Amateurs talk strategy. Professionals talk logistics.” The jet is extraordinary. But extraordinary jets do not fly without tankers – and right now, the tankers deserve a much closer look.