The delayed launch of the new AI chip, how much impact does this have on NVIDIA?

NVIDIA Delays Shipping B200, What's the Impact on Revenue?

According to tech media The Information report, NVIDIA has informed its customers that the new Blackwell B200 chip will be delayed for three months or longer, with bulk shipments postponed to Q1 of next year.

The Blackwell chip was originally scheduled to begin mass production in October 2024. If the delay pushes it to April 2025, it will directly impact NVIDIA's quarterly revenue. In response, NVIDIA told the media that the strong demand for the Hopper chip and the production schedule for the Blackwell chip remain unchanged.

A NVIDIA spokesperson stated:

"As we've said before, the demand for Hopper is very strong. Large-scale sampling of Blackwell has been completed, and production in the second half of the year will proceed as planned. In addition, we do not comment on rumors."

This means that even if the B200 is delayed, the impact on NVIDIA's revenue may not be particularly significant, as the market demand for the Hopper chip remains strong.

Currently, the known chip models under the Blackwell GPU architecture are B100, B200, and the super chip GB200. If the B200 chip is delayed, according to Mizuho analyst Vijay Rakesh, its price may be set between $30,000 and $40,000, while the GB200 may be priced between $50,000 and $70,000.

UBS analyst Timothy Arcuri predicts that by the end of January 2025 quarter, the shipments of B200 and GB200 will reach approximately 32,500 and 43,400 units respectively, accounting for only 7% of all chip shipments in the quarter, with the majority still being Hopper chips.

Combining the estimates of the two analysts, the revenue contribution of B200 products in the quarter ending January next year will reach $3 billion, accounting for 9% of the total expected revenue for the quarter ($34.5 billion).

For NVIDIA's customers, the chip delay may exacerbate concerns about delivery timing. It is reported that tech giants including Google's parent company Alphabet, Amazon, Microsoft, and Meta, the parent company of Facebook, collectively spent nearly $60 billion in capital expenditures in the second quarter, a two-thirds increase year-on-year, with a significant portion flowing to NVIDIA.

The Information also reported that Meta has already placed orders worth at least $10 billion, while Microsoft has increased its order size by 20% in recent weeks and plans to prepare 55,000-65,000 GB200 chips for OpenAI before Q1 2025.

Furthermore, design flaws will also affect the production and delivery of NVIDIA's NVLink server racks, as companies involved in server work must wait for new chip samples before they can finalize the server rack design However, some opinions point out that the slight fluctuations in sales and revenue of NVIDIA are unlikely to change its popularity on Wall Street. As of Friday, NVIDIA's stock price closed at $107, with a price-to-earnings ratio of 40 times based on this year's expected earnings and a projected price-to-earnings ratio of 30 times for next year, still at a high level