Nvidia and AMD Set to Benefit from Saudi Arabia’s Investment
Nvidia and AMD seem to be in prime position following Saudi Arabia’s recent announcement regarding significant investments in technology. The Kingdom intends to acquire a substantial number of chips from both companies to support its AI goals.
This deal is expected to help the two firms regain some of the revenue they recently lost due to conditions in China.
Last week, after visiting Saudi Arabia, President Trump shared that the kingdom is committed to a $600 billion investment with US companies. This investment includes $142 billion earmarked for defense equipment, which will enhance the country’s military capabilities.
Amidst all this, chipmakers Nvidia and AMD stand out as primary beneficiaries. Both companies recently disclosed a partnership aimed at assisting Saudi Arabia in developing its AI sector, with support coming from the Kingdom’s public investment fund.
Nvidia has unveiled plans to supply advanced Graphic Processing Units (GPUs) for construction of AI data centers over the next five years. This initiative will kick off with the shipment of 18,000 GB300 Grace Blackwell AI SuperComputer chips, alongside infriband networking gear.
Moreover, the Saudi Data & AI Authority (SDAIA) will deploy up to 5,000 Blackwell GPUs for smart city projects. Nvidia is also set to train thousands of local developers to implement the first Omniverse Cloud, designed for testing AI solutions.
In terms of financials, analysts at Bank of America project this transaction could be valued between $15 billion and $20 billion throughout the contract, translating to annual revenues of about $3 billion to $5 billion.
Additionally, the US is reportedly on the verge of easing chip export restrictions to the UAE. This would allow for the annual import of 500,000 advanced AI chips by 2027, with a portion going to the Abu Dhabi-based AI company G42 and the remainder supporting the establishment of local data centers.
The deal aims to partially counterbalance the revenue losses incurred in China, which, last year, accounted for approximately $17 billion of Nvidia’s sales. Following new export regulations, the company’s revenue figures from data centers have significantly declined to around $7 billion annually.
Meanwhile, AMD has confirmed a separate $10 billion agreement with a company called Humain to supply chips over five years, spanning both GPUs and CPUs. They’ve also established a memorandum with SDAIA for the future AI data center operations.
AMD’s initial quarterly results indicated a significant revenue hit due to recent export restrictions impacting their Chinese market. However, the agreement with Humain, worth around $2 billion yearly, is expected to offset much of this loss.
Beyond just compensation for lost revenue, these deals might pave the way for future growth for chip manufacturers in the AI and data center domains.
Saudi Arabia and the UAE are not alone in their AI investments; other Middle Eastern countries, like Kuwait, Bahrain, and Qatar, are actively developing their AI infrastructures as well. Outside the region, countries like India and Singapore are also committing resources for AI advancements.
Trump appears open to leveraging the US semiconductor advantage during trade discussions, particularly as negotiations with China evolve. This emphasis on AI infrastructure bodes well for firms like Nvidia and AMD, with Nvidia already dominating the GPU market. AMD has established itself as a strong provider in the CPU sector as well.
This growing focus could lead to accelerated investments in AI, making both Nvidia and AMD appealing options for investors.
