Nvidia’s Blackwell chip delay takes center stage amid falling inventory

(Bloomberg) — Nervous Nvidia Corp investors. are eager for an update on the Blackwell chip launch – hoping for a catalyst to halt the stock’s recent decline.

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The next-generation processor was launched six months ago, but faced engineering issues that delayed its launch. While Chief Executive Officer Jensen Huang tried to reassure the market last month that revenue from the chip would be coming soon, some investors remained tight-lipped on the details. That — along with broader macroeconomic jitters — contributed to a 15% selloff since the earnings report.

Lingering questions about Blackwell will be a key point when Huang speaks at a Goldman Sachs conference in San Francisco on Wednesday. He is scheduled to speak with David Solomon, Goldman’s chief executive, at 7:20 a.m. local time.

“Nobody likes a delay,” said Brian Mulberry, client portfolio manager at Zacks Investment Management Inc. “It’s one of those pitfalls that investors kind of get caught up in.” In the absence of other positive catalysts for the stock — and in combination with broader concerns affecting the entire tech sector — Blackwell’s woes have added to concerns that the AI ​​price has risen too much, too fast.

While Nvidia has done a good job of managing expectations, “they could probably communicate better, especially around the Blackwell issue,” Mulberry added.

That sentiment was echoed by Bank of America analysts, who wrote in a research report last week that details of Blackwell’s delivery preparations are the key fundamental catalyst for a rally in Nvidia shares.

Blackwell is the next generation of the company’s dominant AI processor and has been eagerly awaited by investors to deliver the next step of growth. Nvidia acknowledged in its latest earnings report that there were problems with production and said it had to revamp part of the chip’s manufacturing process.

However, the company said it expects to bring in “several billion dollars” from Blackwell in its fiscal fourth quarter, which ends Jan. 31. The production ramp is scheduled to begin in the fourth quarter and continue through fiscal 2026, according to the comments. on the winning call.

If all goes well and Nvidia is able to ship its Blackwell chips on schedule, then the stock could become less volatile than in recent months, Mulberry said.

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They said they would be able to get things up to speed by early 2025 and “if they can clearly communicate that they are still on track to do this and there will be no more production delays, they can stop. some of these short-term fears,” he said.

Still, if Blackwell faces more delays or problems, that could add to the downside pressure on the stock — especially with few other catalysts on the horizon and potential risks related to a U.S. Department of Justice antitrust investigation.

Randy Hare, portfolio manager at Huntington National Bank, agrees that near-term pressure on Nvidia stock is likely to ease. Still, for investors who believe in AI’s long-term potential, it could be a good time to add positions.

“We may be halfway through the mid-cycle correction,” Hare said. “And then I think you’ll have a good opportunity where people will realize that this is the best growth area in the market and start putting money to work again.”

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Earnings due on Tuesday

–With assistance from Jeran Wittenstein and Subrat Patnaik.

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