MW Nvidia, AMD extend stock gains. Why the AI trade is roaring back.

By Britney Nguyen

Nvidia's partnership with Saudi Arabia's Humain could help offset some of its revenue losses in China, analysts said

The artificial-intelligence trade is back on, as new deals between Saudi Arabia and U.S. chip and tech companies are helping to soothe growth concerns about the semiconductor sector.

Chip stocks like Nvidia Corp. $(NVDA)$ have been under pressure this year - reflecting fears about whether the economy would continue to support robust spending on AI hardware, whether companies were seeing returns on their AI investments and whether geopolitical tensions would curb growth. Now, investors seem to feel better about some of those matters.

Nvidia Chief Executive Jensen Huang on Tuesday announced a partnership with newly launched Saudi AI firm Humain that will span the next five years. As part of the deal, Nvidia will deploy 18,000 chips with Humain - which is owned by Saudi Arabia's Public Investment Fund - for a data center that is expected to reach 500 megawatts. Advanced Micro Devices Inc. $(AMD)$, meanwhile, announced a $10 billion partnership with Humain to build out its AI infrastructure over the next five years.

The developments seem "positive for Nvidia and AMD," and should help "partially offset the impact from the recent U.S. export restrictions to China," Rosenblatt Securities analysts said in a note on Tuesday.

Bank of America analyst Vivek Arya said in a note on Tuesday that it projects Nvidia's and AMD's partnerships with Humain to be worth around $3 billion to $5 billion annually - and between $15 billion and $20 billion over the five-year period. Nvidia's agreement to sell 18,000 of its Blackwell chips amounts to roughly $700 million, Arya said, adding that the chip maker has plans to sell "several hundred thousand of NVDA's most advanced GPUs" to the Saudi company throughout the multiyear partnership.

The BofA analyst agreed that deals by U.S. tech companies with Saudi Arabia could help offset losses from U.S. restrictions on sales to China, and that it could also address concerns over the limited power available for U.S. data centers.

Meanwhile, Wedbush Securities analysts noted earlier this week that President Donald Trump's agreement with China to pause steep reciprocal tariffs between the countries meant that a recession was "off the table for now." That could support a better overall environment for technology purchases.

Nvidia's stock was up 3.5% in midday trading on Wednesday, and is up more than 15% so far this week. The stock is close to recouping all of its year-to-date losses. It changed hands at $134.40 in recent action, near its year-end 2024 close of $134.29. The stock closed as low as $94.31 on April 4.

The company surpassed a $3 trillion market capitalization for the first time since February on Tuesday, as investors reacted to the partnership news.

Nvidia's deal to sell 18,000 of its Blackwell chips to the Saudi AI firm "this year could help mitigate some of the estimated low-teens billions of dollars in revenue headwinds tied to the China restrictions," Rosenblatt analysts said. In a regulatory filing in April, the chip maker said it expects charges of up to $5.5 billion in the fiscal first quarter after the Trump administration banned it from selling its specially designed H20 chips to China.

While Nvidia and AMD are expected to be the "main beneficiaries" of U.S.-Saudi investments, Broadcom Inc. $(AVGO)$, Marvell Technology Inc. $(MRVL)$ and other chip companies stand to benefit too, BofA said.

Broadcom's stock turned positive for the year during Tuesday's trading action. It was down 0.5% on Wednesday and ahead 11% so far this week.

AMD's stock was up 4.2% in Wednesday afternoon action and up nearly 14% so far this week. The stock is also looking to clinch a six-session winning streak, up nearly 19% over that span.

AMD's partnership with Humain "could help offset the $1.5 billion estimated headwind from China restrictions," the Rosenblatt analysts said.

The company also announced a $6 billion share-buyback program on Wednesday.

The Saudi chip deals could alleviate investors' fears over a scaling back in AI spending, Bernstein Research analysts said in a note on Wednesday. The Gulf nation is "another deep-pocketed customer willing and capable to spend large amounts of money on a clearly strategic push as Saudi Arabia attempts to position itself as a regional and global AI hub," the analysts said.

Wedbush analysts shared similar sentiments, saying in a note on Wednesday that "the AI revolution is coming to the Saudi Kingdom and Riyadh will be a major buyer of AI chips, software, autonomous/robotics, and data centers over the next decade."

Following enthusiasm in the market after the U.S. and China agreed to hold off on reciprocal tariffs earlier this week, "the tone in Riyadh has been about the bright green light on the massive AI buildout in Saudi, and this could open up a huge opportunity and [total addressable market] for Nvidia, Palantir $(PLTR)$, Microsoft $(MSFT)$, Amazon $(AMZN)$, Alphabet $(GOOGL)$ $(GOOG)$, Tesla $(TSLA)$ and many other well-positioned chip/software names over the coming years," Wedbush analysts said, adding that they believe Saudi Arabia could eventually add $1 trillion to the global AI market.

But while Citi Research analysts agreed that Nvidia's partnership with Humain is "a good start to what will likely be a new country-to-country negotiation approach by the U.S. government," they are wary of similar success in other countries and said "the risk of tighter access to U.S. AI chips for other key countries remains."

-Britney Nguyen

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May 14, 2025 13:40 ET (17:40 GMT)

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