Nvidia Stock Dips Amid AI Chip Delay
Published On: August 6, 2024
Nvidia (NVDA) stock took a significant hit on Monday, August 5th, following reports of a delay in the production of its next-generation AI processor, the Blackwell B200. The delay, due to a design flaw found late in production, is expected to push the product ramp by at least three months. This is sending shockwaves through the tech industry, impacting not only Nvidia but also its hardware partners and the broader market.
- Stock drop: Nvidia stock plunged 6.4% to close at $100.45, though it rebounded up to 103.57 in after-hours trading
- Related declines:
- Taiwan Semiconductor Manufacturing (TSM), Nvidia's chip manufacturer, saw a 1.3% decline
- Data center specialists Super Micro Computer (SMCI) and Dell Technologies (DELL) dropped 2.5% and 4%, respectively
- Contrasting performance: AMD gained 1.8% to close at $134.82, potentially benefiting from the delay
This news has further dampened investor sentiment amidst an ongoing market correction. However, analysts like Stacy Rasgon from Bernstein maintain a positive outlook, noting that Nvidia’s competitive edge remains substantial despite the setback.
The delay has had ripple effects on other companies in the tech sector, with Taiwan Semiconductor Manufacturing (TSMC), Super Micro Computer, and Dell Technologies experiencing declines. In contrast, Nvidia’s rival, Advanced Micro Devices (AMD), saw an uptick in its stock, likely benefiting from the uncertainty surrounding Nvidia’s product timeline. Analysts like Srini Pajjuri from Raymond James believe that the delay will have a limited impact on Nvidia’s near-term estimates and that customers might continue using Nvidia’s current-generation Hopper AI chips in the interim.
Despite the delay, demand for Nvidia’s AI chips remains robust, driven by major customers like Meta, Microsoft, and Google. Analysts from Loop Capital and Bernstein suggest that the overall impact on Nvidia’s revenue will be minimal, as shipments of the Blackwell series were initially projected to be limited in 2024. This optimism is bolstered by continued strong demand for AI processors from hyperscale cloud-computing service providers.
The bottom line is that while Nvidia’s stock has faced a significant drop due to the Blackwell chip delay, the long-term outlook remains positive. Analysts believe that Nvidia’s dominant market position and the strong demand for its AI processors will help it weather this temporary setback.
For investors, this presents a mixed scenario: while the current dip may cause short-term concerns, the company’s robust market presence and ongoing demand for its products suggest a resilient future. For consumers, particularly those relying on AI advancements, the delay might lead to short-term disruptions but is unlikely to affect the overall trajectory of AI development driven by Nvidia’s innovations.