US sell-off puts Gulf AI investments under scrutiny

Vijay Valecha, Thu, Nov 5, 2026 AGBI

US tech stocks experienced a sharp sell-off last week as investors questioned the viability of the artificial intelligence build-out.

The shift raises questions about return on investment in the sector, including for its Gulf backers.

GCC funds have poured tens of billions of dollars into microchips, data centres and frontier models globally, and are seen as especially resilient to market volatility because of their long-term horizons, analysts have said.

But if commercial demand for the technology lags, they too will contend with the repercussions of delayed returns.

For the Gulf, the stakes extend beyond potential investment losses to the region’s ambitions to become a global technology centre, diversifying its economies beyond oil.

The Iran conflict, high energy prices, stubborn inflation that keeps interest rates elevated and shortages of data centre equipment are all contributing to AI financing and supply constraints.

“The Gulf would feel an AI bust through three channels at once: its sovereign portfolios, its domestic data centre build-out and its oil revenue,” said Century Financial’s chief investment officer Vijay Valecha.

Investments in overseas AI equities, debt or projects would take the most direct hit, followed by planned compute facilities in the region that might not see the light of day. Fiscal constraints might also deepen if an AI-led slowdown in the US puts downward pressure on oil prices.

“The main risk is that the Gulf is becoming too dependent on AI,” Valecha said. “If the sector slows or fails to generate expected returns, the damage would go beyond investment losses. It could also slow the region’s efforts to build new sources of economic growth.”

US tech companies are reporting mixed performances for the third quarter.

Shares in Google’s parent company Alphabet suffered their steepest drop ever after weaker-than expected search-related ad sales prompted worries that AI may be cannibalising its core business.

Amazon‘s share price fell after missing analyst expectations and as spending on AI infrastructure continues to eat into its cash flow.

Microsoft posted strong results on the back of its Azure cloud business but lowered its full-year guidance for capital spending on AI.

Nvidia, a bellwether for the AI outlook, reports on November 17.

Asian financial markets, from South Korea to Australia to Singapore, are also showing scepticism, perhaps a sign that “human psychology now prices in the extinction of AI’s monstrous speculative bubble on Wall Street,” AGBI columnist Matein Khalid wrote last month.

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