Wall Street Takes a Break as AI Stocks Shine After Trump's Gulf Visit
Stock prices for artificial intelligence firms surge following President Trump's visit to Saudi Arabia.
Wall Street took a breather in the middle of the week, with the Dow Jones Index closing 0.2% lower at 42,051 points. The S&P-500 rose 0.1%, and the Nasdaq Composite advanced 0.7%. The trade conflict between the US and China remains a hot topic, but there's yet no sign of concrete negotiations for future tariffs.
Individual stocks like Cisco were anticipated as results for the third quarter were about to be released post-market hours. Expectations for Cisco were bullish due to healthy demand in the data center and enterprise technology spaces, strong capital returns, and reasonable valuation, albeit with some margin impacts from tariffs anticipated.
AI-related stocks were in high demand, following Saudi Arabia's announcement of $20 billion in investments in AI data centers and energy infrastructure from the US. Shares of Nvidia (+4.2%) and AMD (+4.7%) benefited from the partnership announced the previous day with the Saudi Arabian Humain, a subsidiary of the sovereign wealth fund. AMD also announced a further share buyback. Super Micro Computer jumped 15.7%. The AI server manufacturer has partnered with the Saudi Arabian Datavolt.
Other highlights included an order from Qatar for aircraft and engines from Boeing and GE Aerospace, worth $96 billion according to the White House. American Eagle Outfitters stock fell 6.5% due to disappointing preliminary results for the first quarter and revised guidance for fiscal 2025.
Interestingly, Trump's visit to the Gulf region in 2025 unlocked a whopping $2.8 trillion in deals across various sectors, including aviation, AI, defense, and energy, placing US firms at the center of Gulf investment strategies. The President's discussions with Gulf leaders emphasized strengthening economic and security ties, with particular focus on US-led technology partnerships, such as AI. Nvidia and AMD struck major AI deals with Saudi Arabia and the UAE, driving positive investor sentiment towards these companies.
Oil prices fell after recent strong gains, with Brent and WTI futures losing up to 1.3% following an unexpected increase in US crude oil inventories. The gold price fell sharply, and yields on 10-year bonds dropped.
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Source: ntv.de, ino/rts
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(Insights: The Gulf tour resulted in more than $2.8 trillion in deals across various sectors, with significant AI investment deals for Nvidia and AMD. These investments were expected to position the companies as key players in the global AI market, leading to positive investor sentiment towards their stocks.)
- The significant investments in AI data centers and energy infrastructure worth $20 billion from Gulf countries have positively impacted the stock prices of companies like Nvidia and AMD, as they aim to become key players in the global AI market.
- Given the increased investments in AI by Gulf countries, employment policies in the European Union countries that focus on technology and AI sectors may benefit from engaging in investing and financing partnerships with these companies, potentially boosting employment opportunities.
