Inside Wealth: Markets are underpricing the risk of Middle East pullback in AI, says tech investor Jack Selby

Jack Selby, managing director of Peter Thiel’s family office, Thiel Capital, has warned that markets are underestimating the risk posed by a potential Middle East investment pullback in artificial intelligence (AI). Middle Eastern investors, including sovereign wealth funds from the United Arab Emirates (UAE) and Saudi Arabia, currently account for about a quarter of global AI investment commitments over the next five years. Selby cautions that if the ongoing conflict in Iran continues, these countries may redirect funds toward domestic rebuilding efforts, which could significantly disrupt capital flows to AI infrastructure and technology companies worldwide. Selby highlighted that the impact of a Middle East funding withdrawal could be substantial, particularly for data centers and AI projects both within the region and globally. He noted that half of the Middle East’s AI investments are dedicated to local data centers, while the other half supports projects internationally. Major tech players such as Oracle, Nvidia, Cisco, and Microsoft have established significant operations and investment plans in the UAE, with Microsoft alone pledging $15 billion by 2029. OpenAI has also reportedly sought $50 billion from Middle Eastern sovereign wealth funds earlier this year, underscoring the region’s growing influence in AI financing. The potential pullback comes amid broader market volatility, including recent concerns over missed revenue targets at OpenAI, which have unsettled tech and chip stocks. Selby pointed out that some Middle Eastern investors have already begun canceling shipping and business contracts, raising fears that data center projects could be next. This scenario poses risks for high-net-worth investors, family offices, and venture capital funds heavily exposed to AI ventures reliant on Middle Eastern capital. In response to these uncertainties, Selby is focusing his investment strategy on tech firms outside traditional hubs like California, New York, and Massachusetts, through his Arizona-based venture capital fund, Copper Sky. He emphasized that markets have not fully priced in the volatility stemming from geopolitical tensions in the Middle East, which could have far-reaching consequences for the global AI industry if investment patterns shift abruptly.