Nvidia Shares Surge to Record High on UAE Trade Approval

Bassyonni

ago 7 hours

Nvidia Shares Surge to Record High on UAE Trade Approval

Nvidia’s stock reached an all-time high on Thursday, following the U.S. government’s decision to approve the export of AI chips to the United Arab Emirates. This approval, involving multiple billions of dollars, comes as part of a bilateral trade agreement established in May.

The Trade Agreement

The U.S. Commerce Department’s Bureau of Industry and Security issued export licenses necessary for these transactions. Under the terms of the agreement, the UAE has committed to invest $1.4 trillion into the U.S. economy over the next ten years.

Stock Market Performance

On the trading floor, Nvidia shares climbed by 1.8%, closing at $192.57. Earlier, they reached a peak of $195.30, marking a significant milestone in the company’s stock history. This surge follows a strong performance earlier in the month when the stock broke a flat base at a buy point of $184.48.

Analyst Insights

Market analysts are optimistic about Nvidia’s trajectory. Cantor Fitzgerald’s C.J. Muse raised his price target for Nvidia from $240 to $300, affirming an “overweight” or buy rating. He noted, “We are still in the early innings of a multitrillion-dollar AI infrastructure buildout,” emphasizing the ongoing momentum in the AI sector.

Factors Driving Growth

Investment from hyperscale cloud service providers.
Growth of AI startups, referred to as neoclouds.
Enterprise adoption of AI technologies.
Development of physical AI applications such as autonomous vehicles.

Muse further suggested that this growth phase should not be mistaken for a bubble but rather as an essential period in the investment cycle. He highlighted a major shift in the information technology sector towards accelerated AI computing.

The Future of AI Spending

According to Muse, Nvidia anticipates $2 trillion worth of expenditure transitioning from traditional computing to generative AI. This is indicative of the broader trend where various sectors, including social media and advertising, are adopting generative AI.