Nvidia (NVDA) is reportedly postponing the release of its next-generation artificial intelligence chips by a minimum of three months, with mass shipments now expected to begin in early 2025. According to a report by The Information, Nvidia informed Microsoft (MSFT) and another major cloud client about the delay, which is due to a design flaw discovered late in the production phase.
The B200 chips were set to replace the highly popular H100 chips that have sent Nvidia sales, profits and stock soaring.
The AI leader is now holding new test runs with Taiwan Semiconductor Manufacturing Co. (TSM), which makes Nvidia chips.
An Nvidia spokesperson wouldn't comment on reports of a delay, telling The Information in an emailed statement that "production is on track to ramp" later this year.
NVIDIA's next-gen Blackwell AI GPUs have reportedly been delayed, with The Information reporting that "design flaws" are stopping Blackwell from flooding the world of AI. The Information reports on information from two unidentified people that helped produce the Blackwell AI GPU and its server hardware said that NVIDIA's new Blackwell AI GPUs could be delayed for 3 months or more, affecting major customers like Meta, Google, and Microsoft. The artificial intelligence (AI) race began in early 2023 with the viral arrival of ChatGPT. Nvidia's GPUs, which can optimize for AI applications using proprietary software, quickly established a dominant market share. Industry estimates have pegged Nvidia's AI market share as high as 70% to 95%. Research from TechInsights estimates Nvidia accounted for 98% of total data center GPU revenue in 2023.
Analysts anticipate that Nvidia will sell hundreds of billions of dollars' worth of B-series AI chips to major tech firms like Amazon, Google, Meta, Microsoft, and numerous other AI companies. The company's revenue for 2025 will likely depend on its ability to produce enough chips to satisfy this high demand, which could also impact the overall AI sector's performance.
Nvidia's market dominance is remarkable, boasting a $2.6 trillion market capitalization. Its nearest rival in the semiconductor industry is TSMC, with a market cap of $777 billion. However, calling TSMC a direct competitor might be an overstatement, as the Taiwanese firm manufactures the majority of Nvidia's chips through a strategic partnership.
Bloomberg reports that Nvidia informed Microsoft this week about delays affecting its Blackwell AI GPUs, specifically the "most advanced" models. According to sources cited by Bloomberg, the delays mean that substantial shipments are now expected to start in Q1 2025, as reported by The Information.
While The Information reached out to Nvidia for comment, the company did not address the Blackwell AI GPU delays directly. Instead, Nvidia stated that "production is on track to ramp" later this year.
AI market darling Nvidia (NASDAQ: NVDA) has cooled off, dropping roughly 15% since peaking at a $3.3 trillion market cap just a few weeks ago. Despite the recent stumble, the stock has gained over 100% over the past year. Volatility is normal for any stock that rises so much in a short amount of time.
Nvidia (NVDA) stock was sharply lower on Sunday night, following a 5.1% drop last week to $107.27, pushing it well below both the 50-day and 10-week moving averages. The decline in chip and AI stocks mirrored the broader market struggles, with reports emerging late last week of a Justice Department investigation into Nvidia's dominance in the AI sector.
AMD stock fell 5.35% last week, hitting a 2024 low. Despite an initial boost from strong earnings, shares reversed course and declined. TSMC stock retreated 7.5% last week, now significantly below its 50-day and 10-week lines. The company is set to report July sales on Friday. Microsoft dropped 3.95% last week due to weaker-than-expected growth in its Azure cloud computing division, though the stock found some support at its 200-day moving average. Meta shares gained 4.8% last week, closing at $488.14, but ended below their 50-day line after an initial surge following earnings on Thursday.
Google's stock dipped 0.2% last week, following a significant drop in the prior week due to earnings results. Despite these fluctuations, Microsoft, Meta, and Google continue to indicate robust AI-driven capital spending, with a substantial portion expected to be invested in Nvidia chips.
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