Amazon Web Services has acknowledged that it cannot fully restore cloud services at several facilities in Bahrain and the United Arab Emirates, more than six months after drone strikes damaged infrastructure during the early stages of the Iran conflict. The development highlights a new risk for the Gulf’s rapidly expanding data center industry, where governments and technology companies are investing heavily to capture demand from artificial intelligence and cloud computing.

Why Can’t AWS Restore the Bahrain Facilities?

AWS said an assessment of multiple Bahrain-based facilities found that the damage exceeded the level its services were designed to withstand. As a result, the company said it could not restore access to resources and data that were hosted exclusively in the affected region.

The announcement represents AWS’ first public update on the incidents since April. The company had previously advised customers to move workloads to other AWS regions and warned that instability in the Middle East could make operations unpredictable.

In the UAE, AWS said it similarly cannot recover resources and data stored in one availability zone, although efforts continue to restore two other affected zones.

How Significant Were the March Strikes?

Amazon disclosed in March that two of its UAE data centers had been directly struck by drones, while a facility in Bahrain was damaged by a nearby strike. Iran’s Islamic Revolutionary Guard Corps subsequently claimed responsibility and said the Bahrain facility was targeted because of Amazon’s alleged support for the U.S. military.

The incident demonstrates how physical infrastructure has become an increasingly important consideration for cloud providers. Data centers are designed around reliability and redundancy, but severe physical attacks can still create prolonged disruptions when critical equipment and facilities are damaged.

Could Security Change Gulf AI Data Center Plans?

The attacks have raised questions about the security of future data center developments across the Gulf. The region has positioned itself as a major destination for AI infrastructure investment, making the resilience of large-scale computing campuses increasingly important to both governments and technology companies.

The UAE Stargate project illustrates the scale of those ambitions. OpenAI, Nvidia, Oracle and Cisco signed on as core partners in 2025 for a planned AI campus expected to reach 5 gigawatts of capacity and span roughly 10 square miles.

However, the security environment could lead to changes in how such projects are constructed. Reuters has reported that the UAE is considering dispersing facilities across the country and introducing measures including underground construction, blast-resistant concrete and drone and missile interception systems.

What Does This Mean for Cloud Infrastructure?

The AWS disruption adds a physical-security dimension to the broader debate around data center investment. The Gulf’s advantages for AI infrastructure include significant capital investment and ambitious expansion plans, but concentrated facilities can create additional vulnerabilities when geopolitical tensions escalate.

Distributing computing capacity across multiple locations could reduce dependence on any single site, while hardened construction could increase resilience against physical attacks. However, such measures could also increase construction costs and complexity for projects already requiring substantial capital.

What Should Investors Watch Next?

AWS remains committed to supporting customers in Bahrain and the UAE and expects to provide additional information on the UAE situation in the coming months, with further Bahrain updates expected in early 2027. The company’s recovery timeline will therefore provide an important indication of how quickly damaged cloud infrastructure can be restored in a high-risk geopolitical environment.

For investors watching the AI infrastructure boom, the issue extends beyond chips, power and computing capacity. The resilience and geographic design of data centers are becoming strategic considerations as governments and technology companies build increasingly valuable AI infrastructure in regions exposed to geopolitical risk.