The Impact of the War in Iran on AI

For years, AI has concentrated most of the attention in markets. But the recent events in the Persian Gulf and the ongoing war between the US and Israel, Gulf states, and in some way, NATO too, all against Iran have taken the top spot in interest.

And for good reason. But how does a potential long war in Iran affect AI?

I’ve analyzed how AI is being used, the war’s impact on the AI industry, and, perhaps most importantly, I’ve built a financial model I will give you that connects the dots between oil price increases, the financial metric the entire world is paying attention to, and how it impacts the most important metric in AI: infrastructure spending.

And here’s a hint for you: soon things might not be looking good, my dear reader. Let’s dive in.

AI as a Weapon of War

The most important point I want to make clear is that ‘AI in war’ is not about killer robots, weapons, mass destruction, or other fanfic. It’s actually much less spectacular.

Right now, its real wartime role is to speed up human-led operations by compressing the kill chain: turning surveillance, intercepted communications, and other data into target lists, threat rankings, and operational options much faster than before.

Doing what AI does best: crunching data at scale.

That said, public reporting does say Israel used AI alongside espionage to help prepare strikes inside Iran, and US forces are using AI tools to handle huge volumes of operational data in the Iran campaign. Interestingly, despite the public fall-off, Reuters reported that Anthropic’s Claude has supported US military operations tied to Iran, including intelligence analysis and planning.

Beyond being used for targeting and planning, it is also reshaping drone warfare, missile defense, and command systems, which can leverage on-device AIs if they lose connectivity with the command centers.

But the big use case that is often neglected is that AI is now a major weapon in the information and cyber war surrounding the fighting.

AI-generated and altered videos are flooding the information space around the Iran war, often amplified by state-linked propaganda (mostly from the Iran side), which makes it harder to verify casualties, battlefield outcomes, and escalation claims in real time.

So the condensed takeaway is: AI in this war is being used for analysis, targeting, defense, cyber operations, and propaganda, and its main strategic effect is faster decisions on a larger scale, with less transparency and higher risk of error. Again, doing what AI does best: crunching data at scale.

So, for now, you can rest easy in that we can leave humanoid robots to Hollywood. However, the conversation gets much more interesting when we start discussing the economic impact of the war on AI.

The Economic Impact of the War on Iran

Having analyzed how AI is being weaponized, let’s now turn to the economic side: is this war making AI more expensive? The answer is mostly about common sense, but let’s give more detail than simply stating…

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