In a recent development, Nvidia Corp. (NASDAQ:NVDA) has begun supplying its advanced chips to Saudi Arabia, a move that has positively influenced market sentiment in the Middle East and Asia.

What Happened: On Thursday, Brett McGonegal, chairman and CEO at Capital Link, discussed the impact of Nvidia supplying chips to Saudi Arabia in an interview on CNBC.

McGonegal noted that the Middle East and Asian markets responded positively to the news. He emphasized that Nvidia remains a tech bellwether, and strong comments from CEO Jensen Huang are welcomed.

"I think regionally it's great," he said.

He also mentioned that while Nvidia's performance is significant, it should not be solely viewed as a U.S. tech rally. He suggested that the market's reaction could be a flight to safety ahead of the Federal Reserve meeting.

McGonegal concluded that secondary and tertiary plays off Nvidia are performing well, which is positive for market sentiment.

Why It Matters: The supply of Nvidia's chips to Saudi Arabia comes at a time when the U.S. is reassessing its export ban on advanced semiconductors to the country. The U.S. had initially imposed these sanctions in 2023 due to national security concerns.

Saudi Arabia has been aggressively acquiring Nvidia's AI chips, including the H100 models, which are crucial for powering AI software and applications.  Saudi Arabia purchased at least 3,000 H100 chips, valued at $120 million by the end of 2023.

This strategic move aligns with Saudi Arabia's broader ambitions to bolster its technological infrastructure.  Saudi Arabia's need for data centers and semiconductors is driving its negotiations with the U.S. for a historic pact that could include security guarantees and potential diplomatic ties with Israel.

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari