CNBC | Thu, Apr 30 2026 • 2:35 PM EDT

A potential pullback by Middle East sovereign wealth funds could drain hundreds of billions of dollars from the artificial intelligence boom and threaten key data center projects, according to tech investor Jack Selby.

Middle East investors — including sovereign wealth funds and government entities — account for roughly a quarter of global investments committed to AI over the next five years, said Selby, who is managing director of Peter Thiel's family office, Thiel Capital. If the Iran war drags on, and the United Arab Emirates, Saudi Arabia and other countries divert their investments to rebuilding at home, the lost capital could ripple through data centers as well as public and private tech companies, he said.

"I think markets have underappreciated how important the Middle East region is for capex spending as it relates to AI and AI infrastructure," Selby told CNBC in an interview. "If the Middle East starts taking some of these projects offline or canceling some of these projects, the impact on the market could be much, much, much larger than what they currently suggest."

Selby's warning has implications for high net worth investors, family offices and funds betting on the AI trade. A Wall Street Journal report this week about missed revenue targets at OpenAI rattled tech and chip stocks. Selby said the Middle East poses another funding risk, as AI companies have grown more dependent on the region for capital.

Oracle, Nvidia, and Cisco are part of OpenAI's campus in the UAE to build out 5 gigawatts of capacity. Microsoft plans to invest $15 billion in the UAE by 2029. The sovereign wealth funds of the UAE and Saudi Arabia have become key investors in private AI companies, with OpenAI reportedly seeking $50 billion from the big funds in the region earlier this year.

Selby estimates that half of the Middle East's AI funding is dedicated to data centers located in the region. The other half is allotted to projects and data centers worldwide. Middle East funds and companies have already started canceling various shipping and business contracts by invoking force majeure, he said. The big risk is that they start canceling data centers as well.

"Markets don't seem to grasp that this is a very real situation," he said. "It's very volatile. I hope and I pray that it goes back to some semblance of normalcy soon. But it seems to me that markets are underpricing this volatility and the risk."

Beyond the war, AI also faces a broader risk of overinvestment and speculation, Selby said. Like the dot-com bubble, he said investors and founders are bidding up values of AI and infrastructure companies indiscriminately. He said the AI boom is consuming far more capital, with the top hyperscalers expected to spend more than $700 billion.

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