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Saudi Deals Boost Nvidia and AMD Amid Chinese Revenue Losses

President Trump's $600 billion Saudi investment includes big deals for U.S. chipmakers Nvidia and AMD. These agreements, worth billions, could significantly impact both companies' revenues, especially as they aim to counter losses from China. Investors may find attractive growth opportunities ahead.

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AI Rating:   8
**Impact of Saudi Investments on Stock Prices** President Trump's recent announcement regarding Saudi Arabia's pledge to invest $600 billion into U.S. firms directly benefits American chipmakers Nvidia and AMD. Nvidia's commitment to supply several hundred thousand GPUs over the next five years for AI data centers aligns well with anticipated strong demand for AI infrastructure. This deal, estimated to represent $3 billion to $5 billion in annual sales, assists Nvidia in offsetting significant revenue losses resulting from previous U.S. export controls with China. The report indicates that China previously accounted for about $17 billion of Nvidia's revenue, which has now diminished to the mid-single digits. The potential $15 billion to $20 billion deal with Saudi Arabia offers Nvidia a strategic lifeline by diversifying its revenue streams into emerging markets. Similarly, AMD also stands to benefit from a $10 billion agreement to supply chips, which is crucial given its own forecasted revenue hit due to new Chinese export restrictions, projected at $1.5 billion for the year. The shift in focus towards burgeoning markets such as Saudi Arabia is pivotal for both companies as they navigate these geopolitical challenges and adapt to shifting demand. **Earnings and Revenue Implications** The expansion into the Middle East may bolster Nvidia's and AMD's earnings per share (EPS) via enhanced revenue growth from new contracts. As the AI sector continues its expansion, especially in sovereign-funded initiatives in the Gulf region, it positions both Nvidia and AMD favorably against competitors. Furthermore, both companies are already trading at reasonable valuations, with P/E ratios around 30, suggesting they could be undervalued given their potential growth trajectory. This perceived undervaluation, coupled with strong demand in the AI segment, could lead to upward pressure on stock prices as institutional investors look to capitalize on growth prospects. In summary, these strategic partnerships and agreements will likely improve NVIDIA and AMD's revenue forecasts and ultimately enhance profitability, making both stocks attractive to investors focusing on the tech sector's future.
Stocks:  NVDA AMD