Nvidia Reportedly Delays Next AI Chip As Shares Tank On Global Selloff 

Nvidia shares plunged in early premarket trading in New York. The world’s most valuable chip maker is being battered by a global selloff, rising recession fears, AI bubble unwind (mid-July report: „Did The AI Bubble Just Burst, And What Happens Next”) , and reports of delays in its new AI chip production. 

The Information reports that Nvidia has informed Microsoft and other cloud providers that its most advanced AI chip models in the Blackwell series (B200 AI chip) face three months of delays following the discovery of a design flaw „unusually late in the production process.”

Google, Meta, and Microsoft are betting billions of dollars on Nvidia’s new chips to maintain top leadership in the AI arms race. All three companies have ordered „tens of billions of dollars” of advanced AI chips that might not be produced until later this year and might not be ready for mass shipment until the first quarter of 2025.

Nvidia spokesperson John Rizzo told The Verge that production of the new chip could begin „ramping in the second half of this year,” adding, „Beyond that, we don’t comment on rumors.”

For Nvidia, the new AI chips were supposed to lead to new yearly releases of advanced chips, with executives stating just months ago that „Blackwell-based products will be available from partners” starting in 2024.

Now, Nvidia must soon compete with other chip companies, such as AMD, in the AI race. 

Nvidia’s B200 chips will replace the popular H100 chips that unleashed huge sales and robust profits for Nvidia, catapulting shares to the stratosphere.

However, a production delay sparked turmoil in shares on Monday morning, down as much as 10% in premarket trading to the $96 handle. From the $140 peak in mid-June, shares have slid nearly 31%. Now, we must add that a global selloff is also underway this AM.

Meanwhile, UBS analyst Sunny Lin wrote in a note to clients Monday that Nvidia’s manufacturing partner, Taiwan Semiconductor Manufacturing, might run into potential production issues: 

„We believe Nvidia could be prioritizing CoWoS-L’s tight capacity to B200, which has higher value for the GB200 superchip…this may enable Nvidia [to have] better flexibility and be less constrained by TSMC’s CoWoS capacity.” 

Here’s what Wall Street analysts are saying (courtesy of Bloomberg):

Bloomberg Intelligence

• A delay „would potentially limit upside beats to 2H sales estimates,” although „it’s too early to say if this would lead to a miss”

Citi (buy, PT $150)

• Citi is lowering its FY25 estimates given the reported delay, and it is removing a 30-day upside catalyst watch on the stock
• „We view Jul/Oct-Q data center sales as largely intact and estimate ~15% impact to Jan-Q data center sales on lower Blackwell offset partially by higher H200 demand with Apr-Q sales to move higher on the Blackwell push out”

D.A. Davidson (neutral, PT $90)

• Delays „are likely to be short-lived and have limited impact, but they do add a twist to the Nvidia story”
• „The delay in Blackwell shipments may create a shorter term blip which we will have to carefully assess in order to not mistake it for the inevitable cycle turn”

Bernstein (outperform, PT $130)

• The report „is potentially plausible,” but „while potential delays are never great, we aren’t panicking just yet,” as „it remains clear that demand levels continue to rise”
• „Amid the recent turn in sentiment around AI this latest news likely won’t make things better”

Melius Research (buy, PT $160)

• „The issue with Blackwell could impact upside for Nvidia’s third and fourth quarters and push more Blackwell revenue into FY26,” although „sales of Hopper chips H100 and H200 are still going well according to our checks, and could fill a lot of the void”
• Concerns about this issue could get overblown, and „we find it hard to believe all buying plans for Blackwell from Tier 1 and Tier 2 clouds will decrease materially even if delayed a bit – but some could”
• The issue could create a buying opportunity

None of this will help bulls argue against iconic fund Elliott Management’s argument that Nvidia is in a „bubble”, and the artificial intelligence technology driving the chipmaking giant’s share price is „overhyped with many applications not ready for prime time”.