AI chips, such as the graphics processing units that are critical to Nvidia’s success, have become so important globally they are like a form of currency in geopolitical talks on trade, according to analysts at Bank of America.
Such “sovereign AI” deals could represent more than $50 billion annually in the overall $450 billion-$500 billion global AI infrastructure market opportunity globally, BofA said.
“Sovereign AI could also help address limited power availability for data centers in US, plus offset headwinds from restrictions on US companies shipping to China,” analysts added.
Nvidia and AMD are poised to be the biggest winners from the Saudi project, according to BofA, which reiterated buy ratings on those stocks and hiked their prices targets to $160 from $150 and to $130 from $120, respectively.
“Despite being more crowded we believe these vendors are exposed to the modest dependable/secular demand for AI deployments by well-funded: 1) hyperscale/cloud customers (CY25 capex now tracking +44% YoY vs. +7% YoY at same point last year), 2) Recent dissolution of restrictive AI diffusion rules, and 3) Important role played by AI chips as part of geopolitical negotiations around trade/tariffs (GPU as the new ‘coin of the realm’),” BofA said.
“This puts them to the front of the line,” he said. “It’s a red-carpet rollout. It’s a region that ultimately could add a trillion dollars to the market opportunity for AI over the next decade.”
“With China still a tenuous situation, I think it’s a watershed moment,” he added.
