Nvidia Stock Surges 4% on Saudi AI Chip Deal, Breaks 2025 Losing Streak
2min read On May 14, Nvidia's stock price surged during trading hours, marking the first time in 2025 that the company has achieved a positive return for the year. This development signifies a resurgence in the tech stock sector, which has been closely watched for signs of recovery. Nvidia, a leading player in the artificial intelligence (AI) sector, saw its stock price jump by over 4%, resulting in a cumulative weekly gain of more than 15%. This strong performance has pushed Nvidia's year-to-date gain to approximately 0.7%, breaking out of the sideways trading pattern it had been in since the beginning of the year.
The surge in Nvidia's stock price can be attributed to a significant announcement made by its CEO, Jensen Huang, on Tuesday. Huang revealed that Nvidia would be selling over 18,000 top-tier AI chips to Saudi Arabia. This announcement was made during the Saudi-American Investment Forum, where Huang accompanied U.S. President Trump and other tech industry leaders in Riyadh. The deal is expected to help Nvidia mitigate the impact of export restrictions, as noted by several Wall Street analysts. Kevin Cassidy, an analyst at Rosenblatt Securities, suggested that the sale of thousands of chips to Saudi Arabia could offset the revenue pressure caused by market restrictions, which were estimated to be in the tens of billions of dollars.
With this stock price increase, Nvidia joins Meta Platforms and Microsoft as the third member of the "Magnificent 7" tech stocks to achieve a positive return for the year. Meta and Microsoft have seen year-to-date gains of 12.7% and 7.2%, respectively, reflecting market recognition of their AI strategies and business growth. Despite Nvidia's market capitalization rebounding above 300 billion, its current stock price is still more than 13% below the 52-week high it reached in January. This discrepancy highlights the market's cautious stance towards the high valuations of tech stocks.
Over the past two years, Nvidia has been a favorite among retail investors due to the AI boom. However, this year has seen a shift in sentiment, with traders questioning whether AI-related investments have entered a correction phase. In February, concerns about slowing AI spending growth, coupled with high valuations of the "Magnificent 7" companies, led to a collective decline in the sector's stock prices. Additionally, the Trump administration's proposed reciprocal tariffs on China in early April sparked market fears that Nvidia's high-capacity plans could be disrupted. However, a key trade agreement announced on Monday temporarily eased these tariffs, providing a glimmer of hope for avoiding trade conflicts.
Led by Nvidia and other leading stocks, the U.S. stock market has shown signs of a bottoming out and recovery. The S&P 500 index regained its year-to-date losses on Tuesday and continued to rise slightly on Wednesday, marking a remarkable turnaround from its bear market territory in early January. However, there is a noticeable divide within the tech sector: Apple and Tesla have seen year-to-date declines of 15.6% and 13.4%, respectively, while Alphabet, the parent company of Google, has experienced a 12.8% drop due to market concerns about the potential impact of AI technology on its core search business. This divergence underscores the varying performance of different companies in the AI wave.
