🤝 The $600 billion US-Saudi deal

What’s going on here?

The US president signed a deal that’ll bring at least $600 billion of Saudi Arabian investment into the States, with AI initiatives – the trend of the moment – underpinning the agreement.

What does this mean?

Saudi Arabia's pledging to invest at least $600 billion, and officials say it could rise to $1 trillion. That includes a promise to buy hundreds of thousands of chips from US chipmaker Nvidia over the next five years. The tech will help spur on Saudi Arabia’s recently announced AI initiative “Humain”, focused on building out data centers and other AI infrastructure. Amazon and AMD are getting involved too, striking separate multi-billion-dollar deals. As part of the agreement, the US government (obviously) scrapped restrictions on exporting advanced chips to Saudi Arabia – and it extended that to the United Arab Emirates too. That means more customers for US firms. Investors sent Nvidia’s shares up 5%, AMD’s 4%, and Amazon’s 1% after the news.

Why should I care?

For markets: We are so back.

The tech-heavy Nasdaq has pulled off one of the fastest rebounds ever, climbing more than 20% in just over a month. Remember, investors dropped riskier assets – not least their expensive tech stocks – when tariffs were first ramped up. But those investors are one-eighty-ing their one-eighties now, reacting to shrinking levies and an increase in dealmaking. That’s despite the US still being at risk of falling into a recession – a prospect that would usually push them into defense mode.

The bigger picture: AI’s here, there, and everywhere.

AI isn’t just a handheld therapist or digital coworker anymore. Just look at Humain – or OpenAI’s Stargate project in the US. Countries and companies alike are launching billion-dollar initiatives focused on the tech, leading to deals with governments all over the world. Clearly, Nvidia’s CEO wants to be involved in as many of those partnerships as possible, traveling alongside the US president to Saudi Arabia.

What’s going on here?

Tech titan Tencent reported better-than-expected results, after the popularity of games like “Honor of Kings” and “Brawl Stars” pushed China’s most valuable company up another level.

What does this mean?

Tencent made 13% more revenue last quarter than the same time last year, bringing in a higher-than-expected $25 billion. The firm’s gaming and advertising divisions grew their revenue 24% and 20%, respectively, pulling the overall figure up a notch. Although the $6.6 billion in profit that Tencent banked was slightly lower than forecast. WeChat – China’s biggest messaging app, with over 1.4 billion monthly users – came in clutch, too. Advertising on the platform (and elsewhere) is becoming more lucrative for Tencent, with the help of AI. The firm funneled nearly $4 billion into the tech last quarter – 91% more than the same time last year.

Why should I care?

Zooming out: The final boss.

The US has warned any company – anywhere in the world – against using AI chips from Chinese firm Huawei. That’s because the US Department of Commerce says the chips “were likely developed or produced in violation of US export controls”. American chipmaker Nvidia probably cheered at the news. While Huawei’s offerings aren’t quite as sharp as Nvidia’s, a cluster of them together can match their performance. No wonder Nvidia’s head honcho called Huawei “one of the most formidable technology companies in the world”.

The bigger picture: Sometimes bigger is better.

You can see why the US sees China as a threat. The Chinese tech sector has crept up on America’s lately by offering similar performance at cheaper prices, especially in AI. Plus, the country’s manufacturing sector is – by far – the world’s biggest. The same is true for China’s trade surplus (the difference between what it exports and imports). Cheap labor and land means Chinese producers can undercut firms in many other countries and still make a profit.