Chip stocks rallied on Wednesday after a wave of artificial intelligence (AI)–related announcements tied to Saudi Arabia.

Patrick Moorhead, founder, CEO, and chief analyst at Moor Insights & Strategy, joins Market Domination to explain what's real and what's speculative in deals from Nvidia (NVDA), Advanced Micro Devices (AMD), and Qualcomm (QCOM).

To watch more expert insights and analysis on the latest market action, check out more Market Domination here.

Video Transcript

00:00 Speaker A

Patrick, it is great to see you as always. Particularly today, Patrick, because you are the man to answer this question. I was just talking to Maddie, these moves we're seeing these chip names, Patrick. And of course we had President Trump in Saudi Arabia, we had this flurry of headlines, reports, AI specific announcements, Nvidia, AMD, Qualcomm. You did, Patrick, on X. You asked an interesting question, I thought, Patrick, of all those announcements. You asked, listen, are these are these hard deals? Are these hard contracts or more like kind of, you know, soft LOIs, letters of intent. What's what's your line of sight there, Patrick?

01:50 Patrick

Yeah. So, first of all, the only thing, the only similarity between these AI deals is that they're they were with humane and and the KSA, right? But they were very different, right? AMD was all about a joint venture with a $10 billion price tag, but no details on who's funding what, where would the AMD capitalization come from. So, uh, you know, and when the details aren't there, you have to assess that this thing is early in. And then with Nvidia, it was really straightforward, right? They're selling GPUs with a price tag estimated at around $7 billion. But still no firm commitment, no firm order around that. But with that said, it's very exciting because I don't think investors were factoring any of this into their thesis going into this.

03:52 Speaker A

You know, Patrick, one question for chip investors of course has been whether we kind of hit this peak in capex, right? And and my question to you is, was that question in any way answered by what we just saw in Saudi Arabia? And here's how Bernstein, Stacy Rasgon, you know Stacy, he's what he wrote his clients. He said for investors worried about AI capex sustainability, we now have another deep-pocketed customer willing and capable to spend large amounts of money on a clearly strategic push as Saudi Arabia attempts to position itself as a regional and global AI hub. Your response to that, Patrick.

04:59 Patrick

Uh, I agree with Stacy, and I view this as incremental upside, right? This wasn't factored into, uh, into my calculations in terms of this capex. It was typically we just look at the mag 7 and what they committed to. Uh, this was very much not in the mag 7 capital expenditure updates and it's it's an upside. One interesting thing, though, about this is that that we're researching right now is, is this potentially going to take away any business out of Western Europe that has put up nearly every blockade to drive innovation, AI, and it's not that, uh, protecting people's information is important, it is, but when they find themselves drastically behind other parts of the world, this could be a move for the Middle East, Saudi Arabia, and Cutter to take market share away from Western Europe.  Related Videos

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