Nvidia’s stock and shares of data-center hardware companies fell sharply on Monday following reports of a delay in the release of Nvidia’s next-generation AI processor. The downturn in the stock market intensified the losses.
According to a report from The Information, Nvidia informed Microsoft and another significant cloud customer about a delay in its Blackwell B200 AI chips due to a design flaw discovered late in the production process. This issue could postpone the product’s launch by at least three months.
Bernstein analyst Stacy Rasgon commented that the recent shift in sentiment surrounding AI, combined with this news, is unlikely to improve the situation. However, he believes that while delays are concerning, they do not warrant alarm. Rasgon emphasized that Nvidia’s competitive position is currently robust enough that a three-month delay is unlikely to lead to major shifts in market share. He maintained an outperform rating for Nvidia stock with a price target of $130.
In trading on Monday, Nvidia’s stock dropped 6.4%, ending the day at $100.45. Shares of Taiwan Semiconductor Manufacturing, which manufactures Nvidia’s chips, decreased by 1.3% to close at $147.95. Super Micro Computer, a data-center specialist, experienced a 2.5% decline in its stock to $608.83, while Dell Technologies saw a 4% drop to $98.18. Conversely, Nvidia’s rival Advanced Micro Devices rose by 1.8%, closing at $134.82.
Raymond James analyst Srini Pajjuri expressed that the impact of Nvidia’s delay on short-term estimates should be minimal, and noted that customers may consider using Nvidia’s current-generation Hopper AI chips in the interim. He also suggested that AMD might gain some advantage or increased customer interest from this situation.
Loop Capital analyst Ananda Baruah downplayed the potential impact of the Nvidia chip delays, reiterating his buy rating on Nvidia with a target price of $175. He noted that shipments of Blackwell series chips were expected to be limited in 2024, and that a one-quarter delay would shift the volume shipments to the quarter ending in October rather than July.
Bernstein’s Rasgon reiterated that demand for AI processors remains strong among hyperscale cloud-computing providers. In the event of delays in Blackwell shipments, these customers could utilize Hopper chips to bridge any gaps.
Nvidia’s stock features prominently on the IBD Leaderboard and Tech Leaders lists.