Nvidia Stock, Hardware Partners Punished By AI Chip Delay
Nvidia (NVDA) stock and shares of data-center hardware vendors tumbled Monday amid reports of a delay for Nvidia’s next-generation AI processor. A deepening stock market correction worsened the declines.
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Nvidia told Microsoft (MSFT) and another major cloud customer that its Blackwell B200 AI chips will be delayed due to a design flaw found late in the production process, The Information reported late Friday. The issue could delay the product ramp by at least three months.
“Amid the recent turn in sentiment around AI, this latest news likely won’t make things better,” Bernstein analyst Stacy Rasgon said in a client note Monday. “But while potential delays are never great, we aren’t panicking just yet.”
He added, “Nvidia’s competitive window is so large right now that we don’t think a three-month delay will cause significant share shifts.”
Rasgon reiterated his outperform rating on Nvidia stock with a price target of 130.
Nvidia Stock Takes A Dive
On the stock market today, Nvidia stock plunged 6.4% to close at 100.45.
Meanwhile, U.S. shares of Taiwan Semiconductor Manufacturing (TSM), which produces Nvidia’s chips, slid 1.3% to close at 147.95.
Data-center specialist Super Micro Computer (SMCI) saw its stock drop 2.5% to 608.83. Industry peer Dell Technologies (DELL) watched its shares fall 4% to 98.18.
Meanwhile, Nvidia rival Advanced Micro Devices (AMD) gained 1.8% to close at 134.82.
AMD Could See Some Benefit
Raymond James analyst Srini Pajjuri kept his strong buy rating on Nvidia stock and outperform rating on AMD.
“A few months of delay should have a limited impact on Nvidia’s near-term estimates,” Pajjuri said in a client note. In the meantime, customers might switch plans to use Nvidia’s current-generation Hopper AI chips, he said.
“At the same time, we think it’s reasonable to expect AMD to see some benefit or at least garner incremental customer interest,” Pajjuri said.
Loop Capital analyst Ananda Baruah said he expects the overall impact of any Nvidia chip delays to be “relatively de minimis.”
He reiterated his buy rating on Nvidia stock with a price target of 175.
AI Chip Demand Remains Strong
Shipments of Blackwell series chips were likely to be limited in calendar 2024 anyway, Baruah said. A one-quarter pushback will move volume shipments of Blackwell chips to Nvidia’s October-ending quarter from its July quarter, he said.
Bernstein’s Rasgon says demand for AI processors from hyperscale cloud-computing service providers remains strong. And if there’s a delay in Blackwell shipments, those customers could use Hopper chips to fill the gap, he said.
Nvidia stock is on the IBD Leaderboard and Tech Leaders lists.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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