xAI to Be First Customer for Nvidia-Backed Data Center in Saudi Arabia

On November 19, 2025, at the U.S.-Saudi Investment Forum in Washington, D.C., Nvidia and Elon Musk’s xAI announced that xAI would be the inaugural customer for a massive AI data center in Saudi Arabia [2][3]. The facility, built by Saudi-backed Humain (supported by the Public Investment Fund), will deploy approximately 600,000 Nvidia GPUs and consume 500 megawatts of power—making it one of the world’s largest AI superclusters [3][4]. Key details include:

• Partnership
  : Collaboration between Nvidia, xAI, and Humain (Saudi PIF-backed entity).
• Scale
  : 600,000 Nvidia GPUs and 500MW power capacity.
• Strategic Impact
  : xAI gains priority access to critical compute infrastructure, while Nvidia expands its presence in the Middle East’s growing AI market [2][5].

:
[2] CNBC: “Musk’s xAI will be customer for Nvidia data center in Saudi Arabia”
[3] TechBuzz AI: “Musk’s xAI Secures Nvidia’s Massive Saudi Data Center Deal”
[4] Teslarati: “Elon Musk’s xAI gains first access to Saudi supercluster with 600k Nvidia GPUs”
[5] NYPost: “Elon Musk, Nvidia unveil deal with Saudi state-backed firm to build massive AI data center”

Nvidia’s stock (NVDA) experienced declines in the two trading days following the announcement:

• November 20: -7.81% (close: $180.64)
• November 21: -1.30% (close: $178.88) [1]
  This short-term drop likely reflects broader market trends rather than the deal’s intrinsic value, as the announcement is a positive long-term signal for Nvidia’s core Data Center segment (88.3% of FY2025 revenue [0]).

The deal strengthens Nvidia’s leadership in AI infrastructure and expands its footprint in the Middle East—an emerging hub for AI investment. It also validates the demand for Nvidia’s GPUs, which are critical to its growth trajectory [0][3]. Analyst consensus remains strongly bullish (73.4% “Buy” ratings) with a $250 target price (+39.8% from current levels [0]).

:
[0] Company Overview: NVDA (Internal Source)
[1] Stock Price Data: NVDA (Internal Source)

• Market Cap
  : $4.36T (as of November 22, 2025 [0]).
• Data Center Revenue
  : $115.19B (88.3% of FY2025 revenue [0]).
• Valuation
  : P/E ratio of 43.87x (above semiconductor industry averages but justified by high growth [0]).

• Post-Announcement Trading
  : NVDA’s volume remained high (~343M shares/day on Nov20-21), indicating significant investor interest [1].
• Long-Term Trend
  : YTD growth of +29.33% and 3-year growth of +1067.62% highlight Nvidia’s historical outperformance [0].

• Rating
  : 73.4% “Buy” ratings, with a consensus target of $250 [0].
• Implication
  : Analysts view the recent price drop as a potential buying opportunity, given the deal’s long-term value.

:
[0] Company Overview: NVDA (Internal Source)
[1] Stock Price Data: NVDA (Internal Source)

Critical gaps requiring further investigation:

1. Financial Terms
   : Exact deal value, payment structure, and revenue recognition timeline are not public. This limits assessment of immediate earnings impact [2][5].
2. GPU Details
   : Specific models (e.g., H100/H200) and pricing per unit are unknown—key to quantifying revenue from the 600k GPU supply [3].
3. Deployment Timeline
   : No public timeline for data center completion or GPU delivery, which affects revenue forecasting [4].
4. Regulatory Clarity
   : While the U.S. cleared exports for this project, future changes in semiconductor export controls could impact similar deals [5].

: Decision-makers should prioritize verifying these gaps to align investment strategies with the deal’s actual financial impact.

1. Geopolitical Risk
   : Saudi Arabia’s geopolitical position may expose Nvidia to regulatory or reputational risks in the future [5].
2. Supply Chain Constraints
   : Delivering 600k GPUs could strain production capacity, potentially delaying shipments to other customers [3].
3. Valuation Sensitivity
   : NVDA’s high P/E ratio (43.87x) makes it vulnerable to growth slowdowns or earnings misses [0].
4. ROE Concern
   : Nvidia’s low return on equity (1.04% [0]) warrants further analysis to understand profitability relative to shareholder equity.

• Project Progress
  : Timelines for data center completion and GPU deployment.
• Production Capacity
  : Nvidia’s ability to meet demand from this deal without disrupting existing customers.
• Export Controls
  : Changes in U.S. regulations affecting semiconductor sales to Saudi Arabia.
• Data Center Revenue Growth
  : Quarterly performance of Nvidia’s core Data Center segment to validate the deal’s impact.

:

• Users should be aware that Nvidia’s high valuation and geopolitical exposure to Saudi Arabia may increase volatility in the stock [0][5].
• The low ROE (1.04%) raises concerns about profitability efficiency, which warrants careful consideration [0].

[0] Company Overview: NVDA (Internal Source: Ginlix Analytical Database)
[1] Stock Price Data: NVDA (Internal Source: Ginlix Analytical Database)
[2] CNBC: “Musk’s xAI will be customer for Nvidia data center in Saudi Arabia” (URL: https://www.cnbc.com/2025/11/19/musks-xai-will-be-customer-for-nvidia-data-center-in-saudi-arabia.html)
[3] TechBuzz AI: “Musk’s xAI Secures Nvidia’s Massive Saudi Data Center Deal” (URL: https://www.techbuzz.ai/articles/musk-s-xai-secures-nvidia-s-massive-saudi-data-center-deal)
[4] Teslarati: “Elon Musk’s xAI gains first access to Saudi supercluster with 600k Nvidia GPUs” (URL: https://www.teslarati.com/elon-musk-xai-gains-first-access-saudi-supercluster-600k-nvidia-gpus/)
[5] NYPost: “Elon Musk, Nvidia unveil deal with Saudi state-backed firm to build massive AI data center” (URL: https://nypost.com/2025/11/19/business/elon-musk-nvidia-unveil-deal-with-saudi-state-backed-firm-to-build-massive-ai-data-center/)

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Retrieved

: 2025-11-22 04:03 UTC

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: Financial Market Analyst (Ginlix AI)

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: 4.5/5 (high confidence in data, moderate in long-term impact due to information gaps)

Last Updated

: 2025-11-22 04:03 UTC

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