The global AI race has taken a fascinating geopolitical turn as advanced AI chips, particularly those produced by Nvidia, are now functioning as a new form of currency in international trade negotiations. Bank of America analysts have highlighted this shift, dubbing AI chips the new coin of the realm as countries compete for access to these critical components that power artificial intelligence development.
The New Digital Currency
AI chips have transcended their role as mere technological components to become powerful bargaining chips in global trade negotiations. According to Bank of America analysts, graphics processing units (GPUs) like those produced by Nvidia have become so strategically important that they now function as a form of currency in geopolitical discussions. This elevation of AI chips to coin of the realm status reflects their critical importance to national security, technological advancement, and economic competitiveness in the AI era. As countries race to build AI infrastructure, access to these chips has become a key point of leverage in diplomatic and trade discussions.
Middle East's Trillion-Dollar AI Ambition
The Middle East is rapidly emerging as the next major frontier for artificial intelligence development, with Saudi Arabia and the UAE making significant investments in AI infrastructure. Wedbush analysts have called recent developments in the region a watershed moment for Big Tech, potentially adding over USD 1 trillion to the global AI market opportunity. The Saudi-backed AI startup Humain has announced plans to deploy 18,000 of Nvidia's cutting-edge Blackwell chips to power a massive 500-megawatt data center, one of the largest of its kind. This deal represents part of a broader strategy by Gulf nations to pivot from oil dependency to becoming global AI hubs.
Saudi Arabia's Sovereign AI Push
Bank of America estimates that Nvidia's and AMD's AI infrastructure projects with Humain, a subsidiary of the Saudi Arabia Public Investment Fund, will amount to USD 3-5 billion annually or USD 15-20 billion over a multi-year period. Humain will receive 18,000 cutting-edge Blackwell chips from Nvidia, while AMD has signed a USD 10 billion collaboration to provide 500 megawatts of AI compute capacity for Humain's data centers. These sovereign AI deals could represent more than USD 50 billion annually in the overall USD 450-500 billion global AI infrastructure market opportunity.
Geopolitical Chess Match
The Middle East's AI push comes amid growing tensions between the United States and China. While Saudi Arabia is receiving preferential treatment for Nvidia's latest-generation chips, China faces increasing restrictions even on underpowered GPUs as the U.S. attempts to restrain its domestic AI ambitions. Wedbush characterized the Trump administration's positioning as a global game of high-stakes poker to isolate China while strengthening U.S. influence in the Gulf through technology partnerships. Nvidia has become a central bargaining chip in U.S.-China trade talks as both sides seek to balance trade barriers while maintaining technological advantages.
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| The handshake between President Trump and Crown Prince Mohammed bin Salman signifies the strengthening of US-Saudi relations amidst the global AI race |
Beneficiaries Beyond Nvidia
While Nvidia and AMD are positioned to be the biggest winners from the Saudi projects, other chip companies are also set to benefit significantly. Bank of America reiterated buy ratings for Broadcom and Marvell Technology, as well as optical connectivity provider Coherent. These vendors are exposed to what analysts describe as modest dependable/secular demand for AI deployments from well-funded customers, including hyperscalers whose capital expenditures are now tracking 44% year-over-year growth compared to just 7% at the same point last year.
Strategic Implications
The emergence of AI chips as geopolitical currency marks a significant shift in international relations. Nvidia CEO Jensen Huang, dubbed the Godfather of AI by some analysts, is cementing his company's position not just as a hardware provider but as a geopolitical force shaping the future of artificial intelligence. The preferential treatment given to Saudi Arabia over other countries in receiving Nvidia's newest and most powerful chips, introduced only in March, highlights how access to cutting-edge AI technology is becoming a key diplomatic tool. As one analyst noted, This puts them to the front of the line. It's a red-carpet rollout.
Power Constraints and Global Solutions
The development of sovereign AI initiatives in regions like the Middle East could help address some of the challenges facing AI infrastructure development in the United States, particularly limited power availability for data centers. Bank of America analysts suggest these international projects could offset headwinds from restrictions on U.S. companies shipping to China while providing alternative locations for power-intensive AI infrastructure. This global distribution of AI computing resources may become increasingly important as power constraints become a limiting factor in AI development.