Trump's Latest Move On AI And China Propels Chip Stocks

Artificial intelligence (AI) chip stocks, including industry giants like Nvidia NVDA, Advanced Micro Devices AMD, and Taiwan Semiconductor Manufacturing Co. TSM, alongside key players such as Broadcom AVGO, Arm Holdings ARM, Marvell Technology MRVL, and Micron Technology MU, saw a significant surge in their stock prices on Tuesday.

This market uptick was primarily driven by two major developments: reports indicating the Trump administration’s plans to announce substantial AI and energy investments in Pennsylvania, and the U.S. government’s decision to lift certain chip export restrictions to China.

President Donald Trump is set to unveil a major initiative on Tuesday near Pittsburgh, detailing plans for approximately $70 billion in new investments in artificial intelligence and energy infrastructure.

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Bloomberg reported on Monday that this comprehensive plan encompasses the development of new AI data centers, the expansion of power generation capabilities, critical upgrades to grid infrastructure, and the introduction of new training programs and apprenticeships.

This announcement represents a pivotal move in Trump’s broader strategy to bolster America’s leadership in AI by actively encouraging private investment, streamlining regulatory processes, and expediting permits for both technology and energy projects.

The event, hosted by Senator David McCormick at Carnegie Mellon University, is expected to draw a distinguished gathering of around 60 top executives from various sectors, including leaders from BlackRock BLK, Palantir Technologies PLTR, Anthropic, ExxonMobil XOM, and Chevron CVX.

Further underscoring the magnitude of these investments, Blackstone President Jon Gray is anticipated to announce a $25 billion initiative specifically targeting data center and energy infrastructure expansion.

This project is projected to generate thousands of construction and permanent jobs, contributing significantly to the economy. This follows earlier announcements made under Trump’s second term, notably a staggering $100 billion AI investment pledge from a consortium including SoftBank SFTBF SFTBY, OpenAI, and Oracle ORCL.

These strategic moves, alongside the recent rollback of Biden-era AI chip restrictions, are explicitly aimed at counteracting China’s aggressive advancements in AI and maintaining the United States’ technological superiority on the global stage.

Adding to the positive momentum for Nvidia and other chip stocks was the U.S. government’s recent decision to ease chip export restrictions to China. This move is particularly impactful for companies like Nvidia, which had faced significant revenue setbacks due to previous bans.

Gene Munster, managing partner at Deepwater Asset Management, expressed optimism, stating that Wall Street analysts are likely to raise Nvidia’s growth estimates by approximately 10% following this development.

While acknowledging that some analysts might have already factored in the return of Nvidia’s H20 chips to the Chinese market, Munster still anticipates a boost to overall forecasts, emphasizing that, “Either way you look at it, great news for $NVDA.”

This is especially relevant given that Nvidia had previously incurred a substantial $4.5 billion charge in the first quarter of this year, directly attributable to the export ban on its H20 products to China, which was enforced on April 9.

NVDA Price Action: NVDA stock is trading higher by 4.69% to $171.75 premarket at last check Tuesday.

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