Nvidia and AMD Stocks Surge as Major AI Deals in the Middle East Ignite Investor Confidence
Nvidia and AMD shares experienced a substantial rally on May 14, 2025, fueled by positive developments in the global AI landscape. A series of billion-dollar partnerships in the Middle East, combined with AMD’s ambitious stock buyback plan and a growing demand for AI chips, have transformed investor sentiment toward these U.S. chipmakers, who had faced pressure earlier in the year.
Major Partnerships Boost Investor Sentiment
The surge in Nvidia and AMD stocks is attributed to a strategic collaboration with Humain, the AI arm of Saudi Arabia’s Public Investment Fund (PIF). This partnership aims to supply hundreds of thousands of AI chips over the next five years, paving the way for the establishment of large-scale data centers in the region.
Supporting Saudi Arabia’s Ambitious AI Initiative
These data centers are designed to offer up to 500 megawatts of computing power as a component of a broader $10 billion AI investment spanning both Saudi Arabia and the United States. They are expected to handle complex AI workloads, including model training and real-time applications in various sectors such as healthcare, defense, and finance.
Reports from Barron’s and Investor’s Business Daily affirm that Nvidia and AMD are aligning themselves with sovereign-backed AI projects, which are anticipated to create a lasting source of demand.
AMD’s Share Buyback: A Show of Confidence
Alongside the partnerships in the Middle East, AMD announced a new $6 billion stock buyback program, which supplements its existing $4 billion repurchase authorization. This brings AMD’s total buyback capacity to a remarkable $10 billion.
Analysts highlight that this initiative reflects AMD’s confidence in its financial health and future growth. By repurchasing its own shares, the company aims to enhance shareholder value while signaling that it views its stock as undervalued. This buyback significantly contributed to AMD’s 6.4% stock jump on May 14, emphasizing the market’s perception of the company’s financial strength.
A Shift in Chip Demand: The Middle East
Another critical factor behind the stock rally is a growing shift in global demand for AI chips. The U.S. government is reportedly contemplating allowing the United Arab Emirates to import over 1 million Nvidia chips, marking a significant geopolitical pivot away from China.
Historically, U.S. chipmakers like Nvidia have heavily relied on Chinese clients. However, recent trade restrictions and rising tensions have rendered that market increasingly unpredictable. As Middle Eastern nations ramp up investments in AI infrastructure, Nvidia and AMD are capitalizing on emerging opportunities in more geopolitically stable regions.
Early Competition: The Impact of DeepSeek
Earlier in the year, both Nvidia and AMD faced significant challenges when news broke that Chinese AI lab DeepSeek had developed models that could rival or surpass U.S. technological capabilities at a fraction of the cost. This news triggered a sharp sell-off, causing Nvidia’s stock to plummet 17% in just one day, erasing around $600 billion in market value. AMD also felt the brunt of investor concerns.
However, the recent rebound signals a potential recovery from earlier struggles. Strategic deals, market expansions, and initiatives such as stock buybacks are helping reshape investor outlook.
The Potential of Sovereign AI Projects
Analysts from Barron’s suggest that initiatives like Saudi Arabia’s Humain could represent a colossal $50 billion annual global market within the next few years. This insight indicates that current deals might only mark the beginning of a long-term growth trajectory for Nvidia and AMD.
As more nations develop their own AI capabilities, companies like Nvidia and AMD are positioning themselves as essential suppliers. Their chips are crucial for training large AI models, managing extensive datasets, and facilitating real-time applications.
The recent stock surge demonstrates that investors are keenly aware of this transformative shift in demand and are betting on the continued expansion of AI infrastructure on a global scale.
Conclusion
The recent surge in Nvidia and AMD stocks, driven by strategic partnerships and an emphasis on shareholder value, reflects a broader trend of evolving demand in the AI chip market. As geopolitical tensions shift focus away from China, the Middle East presents new opportunities. Analysts believe that these partnerships may signal the dawn of a promising era for U.S. chipmakers.
FAQs
Q1: Why did Nvidia and AMD stocks rise suddenly?
They saw gains after announcing substantial AI chip deals with Saudi Arabia and AMD’s $6 billion buyback plan.
Q2: What is Humain’s role in the AI chip market?
Humain, backed by Saudi Arabia’s PIF, is developing massive AI data centers that will be powered by chips from Nvidia and AMD.
Q3: How does AMD’s stock buyback program benefit investors?
It signals AMD’s confidence in its financial health and aims to return value to shareholders by reducing the number of shares in circulation.
Q4: Why is there a shift in chip demand from China to the Middle East?
Geopolitical tensions have made the Chinese market unreliable, prompting U.S. chipmakers to look for new opportunities in the burgeoning AI infrastructure of the Middle East.
Q5: What impact did competition from DeepSeek have on Nvidia and AMD stocks?
Reports of DeepSeek’s advancements caused a significant sell-off earlier in the year, but recent deals have helped both companies begin to recover from that downturn.
