Nvidia has soared 45% in 2 months. These forces are reviving the hype for Wall Street's favorite AI play.

Business Insider

03-06-2025

Nvidia stock has embarked on a fresh rally thanks to four big catalysts that are generating new enthusiasm for artificial intelligence chip maker.
The stock has climbed 20% over the last month. Since its most recent low in April, the move up is even sharper. After bottoming during the broader market sell-off caused by Donald Trump's tariff announcements, the stock is up 45%, a gain of about $1 trillion in market cap. The stock is up about 5% year-to-date.
That latest rally follows a rough few months for Nvidia. Shares were down more than 30% year-to-date in early April as concerns swirled around export controls and Trump's tariffs, which complicated the chipmaker's business in China.
While the stock has benefited from an easing of tariff-related headwinds that's also boosted the broader market, there are several company-specific forces driving the rally.
Here is what's sparked the latest run of gains for the top chip maker.
AI diffusion rule rollback
The Commerce Department did away with the Biden administration's AI diffusion rule in mid-May, removing restrictions on which countries Nvidia can sell AI chips to.
Those restrictions have been a major overhang for Nvidia stock this year. At a recent tech conference, Ceo Jensen Huang told reporters that export controls have hurt Nvidia's business in China.
"All in all, the export control was a failure," Huang said at the event. "The fundamental assumptions that led to the AI diffusion rule in the beginning, in the first place, have been proven to be fundamentally flawed."
Nvidia's big Saudi deal
Nvidia announced a major partnership with Humain in May. The AI firm is controlled by Saudi Arabia's Public Investment Fund.
The deal involves Humain purchasing advanced semiconductors from Nvidia to create AI infrastructure in the nation. In the first phase of the project, Nvidia will send 18,000 GB300 Frace Blackwell AI supercomputer chips, the firm said in a statement.
That partnership came shortly after Saudi Arabia pledged to invest $600 billion in various US industries, including AI and infrastructure.
"Those 'allies' want to invest here in the USA and also get a hold of a TON of Nvidia chips for domestic AI factories. For Nvidia shareholders, it would seem that this repeal is great news and that the administration is reigniting the 'Sovereign Thesis,'" analysts at Melius Research wrote in a note last month.
Earnings calm jittery investors
Nvidia's first-quarter results were once again strong. The chipmaker reported $44.06 billion in revenue, above analysts' estimates of $43.32 billion.
Perhaps more importantly, however, Huang soothed investors who have been nervous about the impact of disruptions to business in China.
On the earnings call, the company noted that it took a hit from China, but business is still basically booming. Huang slammed export controls, but he affirmed his faith in the Trump administration.
"The president has a plan," Huang said to investors. "He has a vision, and I trust him."
Deepwater Asset Management said last week that Huang's comment suggests that the chipmaker could be in a favorable position as trade negotiations between the US and China continue.
"My best guess is Nvidia will be part of a broader trade agreement with China," analysts from the firm wrote.
No slowdown in enterprise AI spending
The AI hyperscalers like Meta Platforms and Microsoft don't appear to be pulling back on AI spending.
Tech titans like Meta, Microsoft, and Amazon have pledged to spend more than $300 billion this year on AI-related capex. Apple, meanwhile, has said it would spend $500 billion over the next four years.
"Q1 earnings from mega-cap tech companies have also reinforced AI investment visibility, with customers maintaining or increasing their 2025 capex plans," Angelo Zino, a senior equity analyst at CFRA Research, wrote in a note, adding that he believed Nvidia's growth in data centers would run on for at least the next two years.