Donald Trump’s recent trip to Saudi Arabia supposedly netted a shocking $600 billion in deals between the United States and Saudi Arabia. These stakes will especially play out in defense, AI, and energy, vital sectors. This announcement has already triggered a wave of optimism in the financial markets. Trump foresees a boom in stock prices and investment prospects. Saudi Arabia’s Crown Prince, Mohammed bin Salman, went even further, promising to raise the total investment figure to nearly $1 trillion.
In contrast to the EU’s permissive approach, the U.S. is adjusting its export policy towards AI. It is intended to help smooth the path for chip exports to friendly nations such as the UAE, all while keeping strategic pressure on China. Saudi Arabia is particularly serious about deploying esoteric advanced Nvidia chips. Aside from R&D, these high-tech chips are very expensive ($30,000-$40,000/chip). The UAE is already aggressively negotiating to import more than a million of these chips. This action underscores the growing spirit of collaboration in the tech community.
Major Investments in Technology and Defense
Among the agreements highlighted is a big commitment by Saudi AI company Humain, chaired by Crown Prince Mohammed bin Salman. The firm will roll out “hundreds of thousands” of Nvidia’s new Blackwell chips, which would indicate a commitment in the billions of dollars to technological innovation. This latest step is part of a larger trend toward amplified attention artificial intelligence and its potential applications across different sectors.
Beyond AI, defense is a critical pillar of U.S.-Saudi alliances. These bilateral accords are intended to further strengthen military and academic cooperation, as well as high-end technology engagement, between the two countries. The return on these investments is enormous, immediate and economic. Further, they are creating a powerful strategic partnership that could change the balance of power in the region.
AMD has recently scored a huge $10 billion co-investment deal. This funding will go directly toward supporting the company’s growing AI efforts in Saudi Arabia. This partnership is further evidence of the kingdom’s deep commitment to establishing a world-class technology and innovation hub. That makes it a magnet for international tech companies looking to get a foothold in the Gulf.
Market Reactions and Economic Indicators
Unsurprisingly, given his bullish outlook on the stock market, this message has struck a chord with investors. He stated, “The stock market’s gonna go a lot higher,” reinforcing confidence in the economic impact of these agreements. After this news was released, the S&P 500 rocketed back up towards its February highs, showing signs of optimism from traders and market analysts overall.
Specifically, this has been driven by the Magnificent Seven—seven large-cap tech stocks—which are up greater than 7% since Friday’s close. This performance is triple that of the broader S&P 493 index, indicating a strong rally among high-profile companies benefiting from increased investment inflows.
Just like meme stocks of past weekends, big names that are most-shorted stocks had their biggest four-day rally since December 2023, gaining almost 10%. This rally represents a fundamental shift in market sentiment. Investors are encouraged by positive movements in both domestic and international policy that will help bolster economic growth.
Recent economic data has played a huge role in this returned optimism. As of April, the U.S. Consumer Price Index (CPI) is measuring a headline inflation rate of 2.3% year-over-year. This is the first time it dropped this low since February 2021. Core inflation remained unchanged at 2.8%. Both headline and core CPI increased by just 0.2% m/m, a deceleration from the 0.3% expected.
Future Expectations in Economic Policy
As financial market participants read these signs, market expectations about the trajectory of future Federal Reserve policy has changed dramatically. The market today expects only two rate cuts in 2025, a sign that markets are generally comfortable with the current economic picture. This upbeat view is supported by plummeting inflation numbers and a surge in foreign investment, thanks to the U.S.-Saudi deals.
The combination of all these factors has established the perfect storm for this growing movement. It’s no surprise then that investors are closely watching the ways in which these international partnerships develop—and how they shape and influence domestic economic policy. The U.S. is continuing to build relationships with critical partners like Saudi Arabia and the UAE. Market analysts are already expecting huge shifts in investment patterns—and huge shifts in stock performance as a result.