Following a visit to Saudi Arabia last week, President Donald Trump announced that the kingdom has pledged to invest $600 billion in deals with U.S. companies. The agreement includes $142 billion in defense sales to help supply the country with “state-of-the-art warfighting equipment.”
However, the two biggest winners are U.S. chipmakers Nvidia (NVDA 0.28%) and Advanced Micro Devices (AMD 1.91%). Following Trump’s announcement, both companies revealed deals to provide chips to Humain, a Saudi Arabian artificial intelligence (AI) start-up owned by the kingdom’s public investment fund.
Image source: Getty Images.
Helping replace lost Chinese revenue
Nvidia announced it will supply Humain with several hundred thousand of its most advanced graphics processing units (GPUs) over the next five years to help power the AI data centers the company will begin building in Saudi Arabia. It will begin by shipping 18,000 of its GB300 Grace Blackwell AI supercomputer chips, while it will also provide InfiniBand networking equipment.
In addition, the Saudi Data & AI Authority (SDAIA) will deploy up to 5,000 Blackwell GPUs to help enable smart city solutions. Nvidia will also help train thousands of developers in the country and deploy the country’s first Omniverse Cloud to simulate and test physical AI solutions.
Bank of America analysts estimated that the deal could be worth between $15 billion to $20 billion in total spending over the length of the agreement. That would equal $3 billion to $5 billion in annual sales.
In addition, the U.S. is reportedly close to easing chip export restrictions on the United Arab Emirates. The deal would let the nation import 500,000 advanced AI chips a year through at least 2027. About 20% of the chips would go to Abu Dhabi AI company G42, with the rest distributed to U.S. companies building data centers in the country.
The deals should help replace some of the company’s lost revenue to China, after the U.S. tightened export controls to the country. China accounted for about $17 billion of Nvidia’s revenue last fiscal year, but it said it was down to mid-single digits of its data center revenue in fiscal Q4. Based on its Q4 run rate, that would be about $7 billion a year.
AMD, meanwhile, announced it had struck a $10 billion deal with Humain to supply chips to the company over the next five years. AMD said it will provide the full spectrum of its AI compute portfolio, which seemingly means both GPUs and central processing units (CPUs). It also signed a memorandum of understanding with SDAIA to explore using AMD chips to power future AI-focused data centers.
When it reported its Q1 results, AMD noted that it would take a $700 million hit in revenue in Q2 due to new Chinese export restrictions and $1.5 billion for the year. With the Humain deal being worth $2 billion a year, that should replace much of this lost revenue.
The next big trend
In addition to the deals helping replace lost Chinese revenue, they also mark what could be one of the next big growth drivers for the chipmakers: sovereign AI investments.
Saudi Arabia and the United Arab Emirates are clearly looking to invest in AI and data centers, but they are not the only countries. Just within the Middle East, Kuwait has partnered with Microsoft to help position the company as a regional AI leader. Bahrain and Qatar are also spending to build out AI infrastructure in their countries.
Outside of the Middle East, India has partnerships with the big three cloud computing companies to help scale its AI infrastructure. Even smaller countries like Singapore are allocating money toward AI.
Meanwhile, it seems like President Trump is willing to use the AI semiconductor dominance of the U.S. as a bargaining chip in trade deals. As the U.S. negotiates a new trade deal with China, perhaps the recent chip restrictions could even be rescinded.
Is it time to buy the stocks?
Both Nvidia and AMD are well-positioned to benefit from increased AI infrastructure spending. Nvidia is the clear leader in the GPU space with an over 80% market share, and should continue to see strong growth as data center spending continues to ramp up.
Meanwhile, AMD has proven to be a leader when it comes to supplying CPUs for data centers. It’s also carved a nice niche in the GPU market for AI inference. With inference eventually expected to become a much larger market than AI model training, the company is well situated.
In addition, both stocks are attractively valued, with each trading around a 30 times forward price-to-earnings ratio (P/E) and a lot of growth potential still ahead.
Data by YCharts.
As such, both stocks look like attractive investment options right now, given the growth opportunities both still have ahead.
Bank of America is an advertising partner of Motley Fool Money. Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Bank of America, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
