The Iran war is splitting AI fortunes: Labs are less vulnerable than cost-hit hyperscalers and chipmakers

The Iran war has laid bare a paradox: Gulf money is helping underwrite America’s effort to win the artificial intelligence race, and now the US has started a conflict that could destabilize those investments. Some estimates have projected $2 trillion in long-term pledges from Middle Eastern nations to the AI boom, money that now looks precarious.

At the same time, surging energy costs threaten to make data centres far more expensive to run. But the aftershocks of this conflict seem less likely to kill the AI boom entirely than cleave the market in two, leaving so-called hyperscalers like Alphabet, Amazon and Microsoft most exposed to the shifting financial landscape while upstart AI labs such as OpenAI and Anthropic are better insulated.

Investors have long treated the AI bonanza as a monolithic story, but in reality it has two distinct elements—a phenomenally expensive infrastructure business and a cheaper software play. Among the architects of the latter component, Anthropic has been chugging along rather well lately with annualized revenue more than doubling in the last three months to $19 billion, while OpenAI’s is around $25 billion.

Consumers, business clients across finance and life sciences and governments are all paying for subscriptions and access; unlike previous hype cycles around the metaverse and crypto, this momentum looks sustainable.For all the worries about OpenAI’s high cash-burn rate, AI labs also benefit from sticky enterprise contracts. Clients are unlikely to cancel these because of geopolitical uncertainty; instead, they’re likely to maintain them in the hope of making their organizations efficient enough to ride whatever choppy economic waves may be coming their way.