What Happened?
Shares of leading designer of graphics chips Nvidia (NASDAQ: NVDA) jumped 6% in the afternoon session after the company said it would sell more than 18,000 of its AI chips (GB300 Blackwell chips) to Saudi Arabian company Humain to be used in a 500 megawatt data-center project. The agreement also includes further expansion with "several hundred thousand" additional chips potentially planned for delivery within five years.
Separately, reports revealed the Trump administration was considering a large-scale sale of Nvidia's AI-centric chips to G42, a United Arab Emirates-based AI company, and its U.S. partner OpenAI. This deal could involve hundreds of thousands of Nvidia's powerful GPUs. Taken together, the updates hint at significant demand for NVDA's advanced chips, which could help boost sales.
Also, markets experienced a boost after data from the Bureau of Labor Statistics revealed that inflation for the month of April 2025 came in slightly better than expected. The CPI rose 0.2% from the previous month, in line with expectations, while headline inflation rose 2.3% year on year (vs estimates for a 2.4% y/y increase). The data revealed inflation continued to edge closer to the Fed's 2% target. The reaction wasn't anything wild, but the sentiment leaned positive. The Nasdaq led the way, climbing 1.7%, boosting some tech stocks.
This added to the gains from the day before, which was sparked by a breakthrough in US-China trade talks as both sides agreed to pause some tariffs for 90 days, signaling a potential turning point in ongoing tensions, and cooling fears of a prolonged trade war.
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What The Market Is Telling Us
Nvidia’s shares are extremely volatile and have had 35 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 22 days ago when the stock dropped 5% after that stocks grappled with more uncertainty as President Trump criticized the Federal Reserve's approach to interest rate cuts, warning that the pace was slow and could hinder economic growth. Trump's comments added pressure to an already sensitive market, raising concerns about political interference in monetary policy.
Meanwhile, Fed Chair Jerome Powell maintained a cautious stance the previous week, highlighting the difficulty of balancing the dual mandate of steady employment and price stability amid the escalating trade tension. Investor sentiment was further dampened by the absence of constructive progress in trade negotiations, especially US-China relations which took a turn for the worse in the previous week.
Overall, the outlook seemed more unclear heading into the first quarter 2025 earnings season, as a combination of hard to predict monetary policy and unresolved trade tensions weighed on business confidence.
Nvidia is down 5.6% since the beginning of the year, and at $130.53 per share, it is trading 12.6% below its 52-week high of $149.43 from January 2025. Investors who bought $1,000 worth of Nvidia’s shares 5 years ago would now be looking at an investment worth $16,778.
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