Middle Eastern Nations to Spend Billions on NVIDIA Technology, CoreWeave Struck with Market Skepticism
The global competition to lead in artificial intelligence is seeing new players, with intense interest brewing in the Middle East. It appears Saudi Arabia, Qatar, and the UAE are on the verge of investing heavily in AI hardware, which would become a behemoth new market for chip giants like NVIDIA, especially as US-China relations remain entangled.
Middle East AI Ambitions: A Multi-Billion-Dollar Bet on NVIDIA and AMD
Recent diplomatic visits, seemingly involving President Trump and NVIDIA CEO Jensen Huang, seem to have paved the way for multi-billion-dollar arrangements. China has been a tremendous source of revenue for NVIDIA's AI division for several years, but shifting geopolitical conditions could be unlocking other opportunities.
During a Saudi Arabian trip, a new government-backed AI program called HUMAIN was announced. This firm will be investing billions of dollars in AI infrastructure and is making agreements with both AMD and NVIDIA. The deal under discussion is to acquire over 18,000 of NVIDIA's state-of-the-art Blackwell Ultra GB300 AI clusters. HUMAIN will be establishing a staggering 500-megawatt AI infrastructure capacity over the next five years. AMD is in the picture as well, with a reported $10 billion deal with HUMAIN.
Nor is the UAE far behind. Top AI company G42 has declared plans to purchase more than a million NVIDIA AI chips over the next ten years. These actions indicate a deliberate effort by the U.S. to develop alternative trade and tech allies, with Middle Eastern countries flush with oil wealth looking to invest heavily in the AI future.
But these rapid advances are accompanied by some unease. Sources report that U.S. officials warned against, fearful that such wholesale transfers of advanced AI technology could pose national security risks. There is concern that these chips would unintentionally fall into the benefit column for other nations, like China, even with rigorous controls, or even allow these Middle Eastern countries to surpass U.S. AI down the road.
CoreWeave's Rocky Public Debut: Investor Confidence Shaken
Shifting focus to the cloud AI sector, CoreWeave (CRWV), a company specializing in GPU-intensive cloud solutions, posted a less-than-stellar first quarter earnings report as a public company recently. For those who may be unfamiliar, CoreWeave has expanded its business by providing cloud access to NVIDIA's latest GPUs, specifically designed for AI workloads, with optimized infrastructure and low-latency networking capabilities.
Though CoreWeave's Q1 2025 revenue of $981.632 million technically beat consensus estimates by 14 percent, and they announced Google as a new large customer along with a impressive $25.9 billion order backlog ($11.2 billion from OpenAI), their forward-looking guidance disappointed investors. The company guided Q2 capital expenditures (CapEx) of $3 billion to $3.5 billion against revenue guides of $1.06 billion to $1.1 billion. Furthermore, earnings per share (EPS) missed expectations, significantly impacted by $177 million in stock-based compensation related to its IPO.
For the full fiscal year 2025, CoreWeave projects revenue of $4.9 billion to $5.1 billion and operating income of $800 million to $830 million, but much higher CapEx of $20 billion to $23 billion. The company further stated that its CapEx remains "lumpy" and is being financed by self-amortizing debt and a new $1.5 billion revolving credit facility.
The move led DA Davidson analyst Gil Luria to reduce CoreWeave to an 'Underperform' rating, its stock price target set at $36, which is a wide difference from its pre-market trading value of $68. Luria compared CoreWeave to WeWork, although he acknowledged that the proximate distraction for shares will likely be small based upon a low float and high cost of borrowing, and something which may change once lockup expirations are over and secondary offerings are necessary.
