Sumit Roy
2 min read
The artificial intelligence trade got a fresh jolt of energy Tuesday as shares of Nvidia Corp. (NVDA) surged nearly 6% following news that Saudi Arabia will purchase 18,000 of the company’s most advanced AI chips.
“AI, like electricity and internet, is essential infrastructure for every nation. Together with HUMAIN, we are building AI infrastructure for the people and companies of Saudi Arabia to realize the bold vision of the Kingdom,” Nvidia CEO Jensen Huang said in a statement.
The deal with HUMAIN—a subsidiary of Saudi Arabia’s Public Investment Fund focused on artificial intelligence—was announced as President Donald Trump visited the Kingdom and held meetings with Crown Prince Mohammed bin Salman.
Reports suggest the U.S. is preparing to ease restrictions on the export of advanced AI chips to Saudi Arabia and the United Arab Emirates, potentially unlocking billions of dollars in revenue for Nvidia and other AI hardware and software providers.
The development is a welcome geopolitical win for Nvidia, which has spent the past year navigating escalating U.S. restrictions on chip sales to China and other countries.
Last month, the company disclosed that it now needs a license to sell its H20 chip—a lower-powered model designed specifically for the Chinese market—following new export controls. Nvidia is already barred from selling its most powerful AI chips to China.
Still, global demand for AI compute remains insatiable. While China, a market that Nvidia estimates could eventually be worth $50 billion in annual AI chip sales, remains uncertain, this new Middle East opportunity offers a meaningful offset.
Nvidia has long advocated for what it calls "sovereign AI"—the idea that every country will seek to develop its own domestic AI infrastructure. The Saudi deal reflects that vision taking shape.
There’s also hope that AI chip sales to China could resume if a broader U.S.-China trade agreement is reached. Over the weekend, the two countries struck a temporary truce and agreed to lower tariffs, raising investor hopes for further cooperation.
In the meantime, Nvidia investors have plenty to cheer. Shares of the chipmaker have surged 43% since bottoming out in April and are now less than 10% away from their all-time highs.
Nvidia remains a core holding across a wide swath of ETFs. It’s the third-largest holding in the SPDR S&P 500 ETF Trust (SPY) at 6.1% and the Invesco QQQ Trust (QQQ) at 8.1%. It also features prominently in semiconductor ETFs like the VanEck Semiconductor ETF (SMH) and the iShares Semiconductor ETF (SOXX), where it commands weights of roughly 20% and 8%, respectively.
