Nvidia’s (NVDA) shares dropped 2% on Wednesday morning despite the growing list of countries joining the U.S.-led ‘Pax Silica,’ an economic and security alliance focused on securing the AI and semiconductor supply chain.
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While the group is an alliance for countries and not companies, Nvidia, as a global AI chip leader and the world’s most valuable company in terms of market capitalization, could benefit from a U.S.-brokered arrangement. This is even as Nvidia’s chip exports remain a key tool in President Donald Trump’s campaign to prevent the spread of America’s technology to rival countries, particularly China.
UAE Joins U.S.-Led AI Alliance
On Wednesday, the United Arab Emirates joined the group, which was launched in December. Already, countries such as the UK, Australia, Israel, Japan, Qatar, Singapore, and South Korea are part of the group.
The update comes as UAE firms such as G42 and MGX in recent years have stepped up collaborations with U.S. companies on AI projects. For example, MGX, the AI investment arm of the UAE’s Mubadala sovereign wealth fund, joined the Artificial Intelligence Infrastructure Partnership consortium in a bid to acquire Texas-based Aligned Data Centers in a $40 billion deal.
The group was led by asset management giant BlackRock (BLK) and included U.S. tech majors Nvidia and Microsoft (MSFT).
UAE Diversifies Economy from Oil to AI
The UAE, through the state-linked G42, is also involved in Stargate, the massive $500 billion AI data center project. The project is spearheaded by AI startup OpenAI, in partnership with top companies such as Nvidia, Oracle (ORCL), and Cisco (CSCO).
The UAE has been pumping billions of dollars into AI projects to diversify the country’s economy away from oil and make it an attractive destination for AI developers. Its neighboring rival, Saudi Arabia, is also doing the same.
For instance, Saudi Arabia’s Humain is working on a $10 billion data center project in collaboration with U.S. firms such as Nvidia and Advanced Micro Devices (AMD).
Is NVDA a Good Stock to Buy?
On Wall Street, Nvidia’s shares remain a Strong Buy based on analyst consensus rating. This breaks down to 39 Buys, one Hold, and one Sell issued by 41 analysts over the past three months.
In addition, the average NVDA price target of $264.97 suggests about 46% growth potential from current trading levels.
