Pre-market plunge of 12%! NVIDIA exposed to new chip delay, Wall Street analysts remain calm

Zhitong
2024.08.05 13:27
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NVIDIA plunged in pre-market trading due to the delay in new chip launch. Citigroup reiterated a "buy" rating on NVIDIA with a target price of $150. NVIDIA's sales forecast for the fiscal year 2025 has been lowered, but the forecast for fiscal year 2026 remains unchanged. The delay of the new chips for more than three months may make AMD the second largest supplier. Other research firms have also expressed their views on this. NVIDIA may still be the leading company in the field of AI GPUs, but the delayed release of new products may benefit AMD. NVIDIA is expected to announce its latest quarterly earnings later this month

According to the Zhitong Finance and Economics APP, NVIDIA (NVDA.US) plunged before the market opened. Earlier, there were reports that the chip giant delayed the release of its new Blackwell series graphics processing unit (GPU) to customers. As a result, Citigroup lowered its sales expectations for NVIDIA's fiscal year 2025. Citigroup reiterated a "buy" rating on NVIDIA with a target price of $150, but removed the stock from its 30-day catalyst watchlist.

Citigroup analyst Atif Malik stated that considering the demand for chips related to artificial intelligence has not slowed down, increased demand from customers for the H100 and H200 could help NVIDIA "partially offset" the performance decline related to the delayed release of new chips. Reports suggest that the new chips will be delayed by three months or longer.

Malik lowered NVIDIA's revenue expectations for fiscal year 2025 by 5%, but kept the expectations for fiscal year 2026 unchanged, as he believes any sales could just be delayed by a quarter.

NVIDIA may still be the leading company in the artificial intelligence GPU field, holding approximately 90% of the market share. Malik added that the delay in releasing new products by NVIDIA could help AMD (AMD.US) become a stronger second supplier.

Several other research firms have also commented on the reports of NVIDIA delaying the release of new chips.

Bernstein stated that this news is "unlikely to be helpful to current artificial intelligence sentiment," but has not caused panic. Analysts at Wells Fargo said, "Part of the delayed Blackwell production can be offset by H100/H200 and B200A."

NVIDIA is expected to announce its latest quarterly earnings later this month. Analysts generally expect the company's revenue to be $28.5 billion, with earnings per share of $0.82.

As of the time of writing, NVIDIA fell by 11.54% before the market opened, to $94.89

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