Nvidia Corp. (NVDA) stock appears to be on track to extend its gains following a positive headline regarding its chip supply deal with the United Arab Emirates (UAE). The U.S. Commerce Department's Bureau of Industry and Security (BIS) has reportedly granted initial licenses for Nvidia to export chips to the Middle Eastern nation.

In Thursday's early premarket session, Nvidia stock rose about 1% following its 2.20% advance in the previous session. The stock may also receive a boost from solid third-quarter revenue reported by its chip supplier TSMC (TSM). On Stocktwits, retail sentiment toward the stock stayed 'bearish' as of early Thursday, and the  message volume remained 'normal.'  The stock was the top-trending equity ticker on the platform. 

A Bloomberg report, citing people familiar with the matter, stated that the approval has been granted in accordance with the terms of the bilateral artificial intelligence (AI) agreement signed in May. Shipments of billions of dollars' worth of Nvidia chips to the UAE were stalled as the reciprocal investments weren't finalized and the U.S. remained wary of the security threat posed by China's closeness to the Muslim nation.

The greenlight came after the UAE committed to concrete plans to invest a reciprocal amount in the U.S. According to the agreement signed in May, apart from paying Nvidia for the AI chips, the UAE is required to invest in the U.S. on a 1:1 ratio, implying that for every $1 billion worth of chips purchased, it is necessary to send $1 billion to the U.S.

The Bloomberg report stated that its source, who spoke on the condition of anonymity, did not confirm the exact value of the approved chip shipments or the specifics of the UAE's investment commitment. While Emirates and Nvidia declined to comment on the report, a spokesperson reportedly told Bloomberg that“The Commerce Department is fully committed to the transformational U.S.-UAE AI partnership deal.”

The bilateral agreement signed in May mainly concerned a five-gigawatt (GW) data center in the UAE's capital, Abu Dhabi. Emirates had then pledged a $1.4 billion investment in the U.S. over the next decade, while the U.S. committed to approving shipments of up to 500,000 advanced AI chips annually. About one-fifth of the shipments were to be bought by Abu Dhabi's AI stalwart G42. The report stated that the initial permits issued did not provide for shipments to G42.

A bullish watcher called the news“huge” for the stock.

Another user hoped for a $10+ single-day parabolic move following the news.

Nvidia's stock has risen 41% this year, far outperforming the tech-focused Invesco QQQ Trust (QQQ) exchange-traded fund (ETF), which is up a more modest 19%.

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