AI chips are becoming the new global currency: Bank of America is optimistic about Nvidia and AMD, Saudi Arabia's major order highlights the demand for AI infrastructure

Taiwan • Business • 05/19 10:50
AI chips are becoming the new global currency: Bank of America is optimistic about Nvidia and AMD, Saudi Arabia's major order highlights the demand for AI infrastructure

A report by the Bank of America indicates that AI chips are emerging as the "new currency" in global geopolitical and economic negotiations, whose strategic value surpasses that of traditional tech products. Saudi Arabia has entered into multi-billion dollar AI infrastructure agreements with NVIDIA and AMD, and global AI infrastructure spending is expected to reach $6.7 trillion by 2030, with chip designers capturing a $3.1 trillion market share. This "sovereign AI" wave led by the Middle East is reshaping the power dynamics of global technology and capital markets.

Key Updates

05/20 13:47

Jim Cramer, a CNBC personality, comments on the 10 biggest stock market events of May 20, 2025, and five key things investors should know before Tuesday's market opens.

On May 20, 2025, investors are faced with corporate earnings reports, policy reviews, and market dynamics. CNBC host Jim Cramer outlined the top ten stock market events, including Home Depot's earnings report boosting its stock price, AMD's sale of its server business, and MongoDB's downgrade. Meanwhile, the top five market headlines before Tuesday's opening highlight macroeconomic and corporate developments, such as comments from Federal Reserve officials, rising mortgage rates, and retailers' strategies regarding tariffs. These events impact market sentiment and investment strategies.

05/20 10:51

Moody's downgrade leads to a drop in U.S. stock futures: Dow Jones at 34,800 points, S&P 500 at 4,960 points, Nasdaq 100 at 21,440 points

On May 20, 2025, Moody's downgraded the U.S. sovereign credit rating from Aaa to Aa1, leading to a drop in the futures of the three major U.S. stock indices. Dow Jones Industrial Average futures stood at 42,800 points, S&P 500 futures were approximately 5,960 points, and Nasdaq 100 futures were approximately 21,440 points. Concerns over the U.S. fiscal deficit and debt sustainability have intensified, putting pressure on the stock, bond, and foreign exchange markets simultaneously. Despite the recent strong performance of the S&P 500 spot index, the weakness in the futures market reflects investors' cautious outlook on future trends.

05/20 04:48

Retail investors pour into Tesla, Palantir, and Bitcoin ETF: Record buying helps stabilize the US stock market, mitigating the effects of Moody's downgrade.

After Moody's downgraded the U.S. sovereign credit rating, retail investors sparked a record-breaking buying spree on May 19, with a net purchase of $4.1 billion in U.S. stocks, reaching a new all-time high. Tesla, Palantir, and Bitcoin ETF were the primary targets for capital inflow. Despite the S&P 500 index dropping more than 1% in early trading, it recovered due to retail buying, closing up 0.09%. Wall Street analysts recommend that investors see market pullbacks as opportunities to increase their positions.

05/19 22:49

Moody's Downgrades U.S. Credit Rating, U.S. Stocks Rebound Despite the Downgrade: Dow Jones Gains 137 Points, Philadelphia Semiconductor Index Declines

On May 16, Moody's downgraded the U.S. sovereign credit rating from "Aaa" to "Aa1," causing initial market volatility. However, on May 19, the three major U.S. stock indices closed higher despite the trend. The Dow Jones Industrial Average rose by 137.33 points, the S&P 500 inched up 0.09%, the Nasdaq ticked up 0.02%, while the Philadelphia Semiconductor Index fell by 0.50%. Investor sentiment steadied as retail buying supported the market, showing confidence in U.S. assets. In the bond market, the yield on the U.S. 10-year Treasury rose to 4.55%, and safe-haven assets like gold rose 1.54%.

05/19 13:47

CNBC personality Jim Cramer calls out the week's top ten stock market events and five must-know things before Monday's market opens.

On May 19, 2025, Moody's downgraded the United States' sovereign credit rating, leading to a drop in U.S. stock futures, a rise in long-term bond yields, and a withdrawal of funds from risk assets. CNBC host Jim Cramer listed the top ten stock market events for the week, including corporate earnings reports, the impact of the downgrade, and developments in AI technology. The five key points to watch before Monday's market opening provide context, including Moody's downgrade, last week's stock market rebound, Nvidia's new technology, progress on the congressional budget bill, and the tariff dispute involving Walmart and Trump.

05/19 10:50

AI chips are becoming the new global currency: Bank of America is optimistic about Nvidia and AMD, Saudi Arabia's major order highlights the demand for AI infrastructure

A report by the Bank of America indicates that AI chips are emerging as the "new currency" in global geopolitical and economic negotiations, whose strategic value surpasses that of traditional tech products. Saudi Arabia has entered into multi-billion dollar AI infrastructure agreements with NVIDIA and AMD, and global AI infrastructure spending is expected to reach $6.7 trillion by 2030, with chip designers capturing a $3.1 trillion market share. This "sovereign AI" wave led by the Middle East is reshaping the power dynamics of global technology and capital markets.

05/19 06:51

U.S. stock index futures continue to decline following Moody's credit rating downgrade: Dow futures at one point fell more than 300 points.

On May 19, 2025, Moody's downgraded the U.S. sovereign credit rating from Aaa to Aa1, leading to a decline in U.S. stock futures during the Asian trading session. Dow Jones Industrial Average futures fell by 311 points, S&P 500 futures fell 60 points, and Nasdaq 100 futures declined 278 points. This downgrade sparked market concerns, affecting global stock markets and driving up the prices of safe-haven assets such as gold. U.S. Treasury yields neared 4.5%, becoming a key focus for the market, potentially impacting the flow of funds into the stock market.

05/18 10:17

Key Drivers of U.S. Stock Market Trends This Week: Trump's Tariff Negotiations, Federal Reserve Policy, Economic Data, Computex Taipei, and Corporate Earnings

Last week, the major U.S. stock indices rebounded, with investors focusing on five key variables: the Trump administration's tariff policy and trade negotiations, the Federal Reserve's policy stance, U.S. economic data, technology information from the Taipei International Computer Show (COMPUTEX 2025), and corporate earnings, especially the growth expectations for tech stocks. These factors will influence the short-term trend of U.S. stocks.

05/17 22:17

Moody's downgrade of U.S. debt leads to an increase in yields, as Trump signs a $2 trillion deal during his Middle East trip, boosting AI and prompting a stock market rebound.

On May 16, 2025, Moody's downgraded the United States' sovereign credit rating from "Aaa" to "Aa1," leading the 10-year U.S. Treasury yield to rise to 4.49%, and U.S. stocks were under pressure after hours. President Trump visited the Middle East that same week, signing economic and arms deals exceeding $2 trillion with Saudi Arabia, the UAE, and Qatar, and facilitated cooperation on AI chips, which boosted tech stocks. Despite the short-term volatility caused by the downgrade, the market remained optimistic due to the strong performance of AI and tech stocks.

05/17 14:27

Lisa Shalett, Chief Investment Officer at Morgan Stanley, warns: The rebound in U.S. stocks might be coming to an end, suggesting a shift from technology stocks to the financial and healthcare sectors.

Morgan Stanley Wealth Management's Chief Investment Officer, Xia Leite, warns that the rebound in U.S. stocks is unlikely to be sustained. She advises investors to realize profits from tech stocks and shift towards industries such as finance, energy, and healthcare, which benefit from regulatory easing. She points out that there is a structural shift in the AI sector, with corporate revenues and free cash flows below expectations, constraining the market's upward potential. Xia Leite's view aligns with changes in market fund flows, indicating an increasing preference among investors for defensive and value-oriented assets.

AI Chips: From Technological Products to Geopolitical Bargaining Chips

In its latest report, Bank of America highlights that AI chips, particularly graphics processing units (GPUs), have become crucial assets in global trade and geopolitical negotiations. The report describes these chips as the "coin of the realm," emphasizing their importance not only in the technological realm but also in their role in international negotiations. As countries race to build AI capabilities, those with advanced chips hold the ticket to future technological dominance.

Bank of America analysts point out that the strategic value of these chips has made them a core issue in trade and tariff negotiations. Especially against the backdrop of intensified US-China tech competition, AI chip export policies and supply chain control have become focal points for the US government and businesses.

Saudi Arabia's Major Deal Ignites AI Infrastructure Boom

Recently, Humain, a startup under Saudi Arabia's sovereign fund, signed a significant agreement with NVIDIA to purchase 18,000 next-generation Blackwell AI chips and build a 500-megawatt AI data center. This data center will become the core hub for AI computing in the Middle East, expected to be completed within the next five years.

Simultaneously, AMD also signed a $10 billion cooperation agreement with Humain to provide chips and software support, assisting Saudi Arabia in building AI infrastructure. According to Bank of America estimates, the annual investment for this AI infrastructure project will reach $3 billion to $5 billion, with total investment potentially reaching $15 billion to $20 billion in the coming years.

These collaborations not only strengthen NVIDIA and AMD's positions in the global AI market but also highlight Middle Eastern countries' ambitions in the AI field. Humain plans to build AI data centers in Saudi Arabia and the US simultaneously and collaborate with US tech companies like AWS and Groq to create a complete AI ecosystem.

AI Infrastructure Market Size and Chipmakers' Potential Benefits

According to a report released by McKinsey & Company in 2024, global AI infrastructure spending is expected to reach $6.7 trillion by 2030. Of this, approximately $3.1 trillion will flow to AI chip designers to support the construction of data centers and high-performance computing platforms.

Bank of America further notes that these "sovereign AI" deals could represent a market value of over $50 billion annually. These deals encompass not only chip procurement but also data center construction, talent training, and cloud computing platform integration. NVIDIA and AMD are seen as the biggest beneficiaries of this wave, with Bank of America raising their stock price targets to $160 and $130, respectively.

Additionally, other US chip design companies like Broadcom, Marvell Technology, and fiber optic connection supplier Coherent are also listed by Bank of America as potential beneficiaries. These companies have experience working closely with cloud service providers (CSPs) and can offer comprehensive AI infrastructure solutions.

Strategic Alliances Between US Tech Companies and the Middle East

The AI infrastructure investment led by Saudi Arabia has attracted participation from several US tech giants. In addition to NVIDIA and AMD, Amazon's AWS has also announced a $5.3 billion investment to collaborate with Humain in establishing an AI dedicated area in Saudi Arabia. These collaborations extend beyond hardware supply to include cloud platforms, AI model training, and localized application development.

According to reports from Fortune and Investing.com, these collaborations are also seen as part of the US government's technology diplomacy efforts in the Middle East. Through technology export and talent exchange, US companies can maintain a leading position in the global AI competition while assisting Middle Eastern countries in achieving digital transformation.

Increasing Demand for AI Chips and Rising Corporate Capital Expenditure

According to data from Bank of America and other research institutions, global demand for AI computing power continues to grow rapidly. By 2025, capital expenditures by tech giants like Microsoft, Amazon, and Alphabet are expected to reach $260 billion, with most of it allocated to AI chips and data center construction.

NVIDIA's AI server shipments in the first quarter of 2025 have reached significant numbers, and it continues to expand its global data center deployments. AMD, through its collaboration with Humain, further solidifies its position in the AI accelerator market. These developments indicate that AI chips are not only at the core of technological innovation but also critical assets in global capital markets and geopolitics.

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