A note from Yardeni Research has flagged the Strait of Hormuz as a strategic vulnerability for global internet infrastructure, drawing attention to the concentration of undersea fiber-optic cables that link Europe, the Middle East, and Asia.
According to the research, subsea cables routed through the Strait of Hormuz account for as much as 20% of global internet and financial data flows. That share makes the corridor a central conduit for communications and transactions, and a potential single point of failure for a range of services that depend on uninterrupted connectivity.
Major technology firms are evaluating their exposure to the strait. Amazon, Alphabet's Google, Meta Platforms, and Microsoft are among the companies said to be assessing vulnerabilities related to the route amid elevated geopolitical tensions in the region.
The global system of subsea cables comprises more than 500 individual lines that together carry over 95% of international data traffic, the note points out. That concentration underscores how dependent international communications are on physical cable networks running beneath the oceans. Past incidents - including earthquakes, accidental damage, and suspected sabotage - have previously disrupted service and highlighted how exposed the system is to physical risks.
In the Gulf, initiatives to develop artificial intelligence hubs could be complicated by the strait's role as a data chokepoint. Saudi Arabia, the United Arab Emirates, and Qatar have invested heavily in AI infrastructure, data centers, and partnerships with global technology companies. Firms involved in projects tied to the region's AI expansion include Microsoft, OpenAI, xAI, Nvidia, and AMD.
The report notes that at least seven major cables that serve Gulf-based AI projects pass through the Strait of Hormuz, creating a potential bottleneck for cloud computing, financial transactions, e-commerce platforms, and data center operations.
Potential alternatives to the current routing exist - including overland fiber routes, connections via the Red Sea, and new links through Oman and Saudi Arabia - but the research stresses these solutions would demand substantial capital investment and likely take years to be built and brought online. As a result, governments and technology companies may accelerate investment plans for alternative routes and overland fiber networks to reduce reliance on the single strategic chokepoint.
The report warns that concern over possible disruptions could translate into a new geopolitical risk premium for technology infrastructure investments, analogous to how geopolitical tensions have already affected energy markets. That premium would reflect investor and corporate apprehension about physical exposure of critical data pathways.
Context and implications
- Subsea cables through the Strait of Hormuz carry up to 20% of global internet and financial data flows.
- The worldwide network of more than 500 undersea cables transports over 95% of international data traffic, making undersea infrastructure central to global communications.
- At least seven major cables that support Gulf AI initiatives pass through the strait, creating potential operational constraints for regional cloud and AI projects.