Concerns about a delay in Nvidia's (NVDA) upcoming AI chips are likely overblown, according to analysts. The potential setback is not expected to significantly impact Nvidia's revenue or demand. Reports suggest that Nvidia's Blackwell chips might face delays of three months or more due to design flaws, potentially affecting major customers like Meta (META), Alphabet's (GOOGL) Google, and Microsoft (MSFT).
Analysts maintain that demand for Nvidia's AI chips remains robust, with major tech companies continuing to increase their capital expenditures on AI infrastructure. Bernstein analyst Stacy Rasgon noted that even if delays occur, Nvidia's existing "Grace Hopper" chips could mitigate the impact. Rasgon emphasized that Nvidia's strong competitive position is unlikely to be significantly affected by a short delay.
Market Overview:- Concerns about Nvidia's AI chip delays may be exaggerated.
- Potential three-month delay due to design flaws.
- Nvidia's competitive position remains strong.
- Nvidia holds over 80% of the AI chip market.
- Existing "Grace Hopper" chips expected to fill any potential gaps.
- Analysts confident that issues will be resolved through updates.
- Nvidia's demand for AI chips driving data center revenue remains strong.
- Blackwell chip production on track for the second half of the year.
- Continued growth expected in AI chip demand despite potential delays.
Nvidia's dominance in the AI chip market, commanding over 80% of the market share, positions it uniquely as both a key enabler and beneficiary of the AI boom. CEO Jensen Huang previously announced that the latest Blackwell AI chips were set for a second-quarter release. However, supply constraints and the complexity of manufacturing advanced AI chips have posed challenges.
Despite potential delays, TD Cowen analysts expressed confidence that Nvidia would resolve any issues through firmware or platform updates. These minor setbacks are not expected to impact the long-term demand for Nvidia's data center solutions. A spokesperson for Nvidia confirmed that demand for their AI chips remains strong and that production of the Blackwell series is on schedule for the latter half of the year.
