Tech bull market in full swing amid AI boom and huge Saudi deals

After being written off following the Chinese DeepSeek shock and during President Trump’s tariff crash, American tech stocks are back. Graeme Evans reports.

14th May 2025 13:18

Graeme Evans from interactive investor

NVIDIA Corp (NASDAQ:NVDA) back in the $3 trillion club, a Nasdaq bull market and the fastest rise by the S&P 500 index since April 2020 mark a rapid revival for US markets since their Liberation Day lows.

The de-escalation of the US-China trade war and receding inflation fears have fuelled the recent outperformance, even though uncertainty remains over 90-day trade truces.

Invest with ii: B uy US Stocks from UK | Most-traded US Stocks | Cashback Offers

Valuations of global tech giants including Nvidia, Amazon.com Inc (NASDAQ:AMZN) and Advanced Micro Devices Inc (NASDAQ:AMD) were given an additional boost yesterday after they unveiled agreements with Saudi Arabia’s new state-owned AI company Humain.

The deals formed part of an economic partnership that President Trump struck with Saudi Crown Prince Mohammed bin Salman.

Nvidia shares rose 5.6% by last night’s closing bell, an ascent that helped power the tech-focused Nasdaq 1.6% higher and the Magnificent Seven up by 2.2%.

The move left the chip giant’s valuation above $3 trillion for the first time since late February and within touching distance of Apple Inc (NASDAQ:AAPL) as Wall Street’s second-largest company at $3.18 trillion.

The Nasdaq is now back in a bull market after climbing 24.5% from its post Liberation Day low, while the S&P 500 index is higher year-to-date for the first time since February.

This follows a rise of 18% since the low of 8 April, leaving the benchmark back within 4% of its record. Deutsche Bank notes the last time the index surged that fast in just over a month was in April 2020, when markets were roaring back from the initial Covid slump.

Source: TradingView. Past performance is not a guide to future performance.

The bank also noted the unwinding of several other post-Liberation Day moves, with the VIX fear index closing last night at 18.44 points compared with more than 52 on 8 April.

The developments are in sharp contrast to Bank of America’s April survey of institutional, mutual and hedge fund managers, which was the fifth most bearish in a quarter of a century.

The poll showed the largest ever two-month drop in Wall Street stock allocations amid agreement among respondents that the theme of US exceptionalism has peaked.

As well as the recent US-China truce on tariffs and yesterday’s softer inflation print, sentiment has benefited from the reassuring tone of quarterly earnings updates.

About 90% of the S&P 500 index has now reported, with Walmart due to post figures tomorrow and Nvidia one of the last to enter the results spotlight on 28 May.

UBS Global Wealth Management told clients today that it believes the risk-reward in global tech remains attractive and that investors should continue to position for an ongoing recovery in quality AI names globally.

It said company and survey data continued to point to strong AI demand, with Taiwan Semiconductor Manufacturing Co last week reporting April revenue 48% higher than a year ago.

UBS said: “With the chipmaker keeping its forecast for AI-related sales growth to double this year and maintaining its capital spending projection, we believe this points to strong underlying AI demand.

“Separately, US Census Bureau data suggest the AI adoption rate could cross the 10% threshold by the end of this year, just one-eighth of the 24 years it took for US e-commerce to reach such market penetration.”

It said the AI deals announced on Tuesday as part of President Trump's tour of the Gulf states reinforced its view that the global AI spending outlook remains encouraging.

During their recent first-quarter earnings releases, mega-cap tech companies largely maintained their spending outlook for this year, with Meta Platforms increasing its capital expenditure guidance for 2025 due to additional data centre investments.

UBS said: “With new AI entrants such as low-cost models in China, neocloud providers, and other enterprise and sovereign cloud providers, we expect global AI spending to grow by 60% this year to $360 billion, and by another 33% in 2026 to $480 billion.

“The strong spending to advance the technology should continue to underpin the robust secular AI trend in the coming years.”

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

Get more news and expert articles direct to your inbox