Delays to Nvidia’s next-generation artificial intelligence (AI) may not be as bad as initially feared.
Nvidia shares (NVDA 6.53%) The stock surged on Tuesday, climbing as much as 6.2%. As of 1:33 p.m. ET, the stock was still up 5.7%.
The catalyst that boosted shares of chipmakers and artificial intelligence (AI) specialists was reports that delays to Blackwell AI processors may not be as bad as initially feared.
Billions of dollars are at stake
Nvidia’s long-awaited Blackwell B200 AI processors, scheduled to start shipping later this year, will be delayed by up to three months due to a design flaw, according to a report first published on The Information website earlier this month.
With potential sales of billions of dollars in next-generation AI processors, investors were understandably concerned and shares fell following the news.
But things might not be so bad. Analysts at UBS have looked into the issue, claiming that shipments of Blackwell’s chips “will likely be delayed by up to four to six weeks, to the end of January 2025.” Demand remains strong, and the short delay period will likely be filled by Nvidia’s H200 processors, the analysts wrote in a client note. UBS further suggests that research institutions and enterprise clients continue to invest heavily in AI, “both bullish signs.”
The long road
It’s important for Nvidia investors to remember that the company’s growth, especially when it comes to AI, is intermittent. Moreover, a look at Nvidia’s stock chart highlights an important lesson: While the company’s stock price has risen 24,000% over the past decade, there have also been many periods when it was down more than 50%.
Investors who can withstand the sometimes heart-breaking volatility that comes with holding these high-growth stocks have reaped huge rewards. And to get those rewards, they have to ignore the day-to-day movements of the stock market.
While 42 times Nvidia’s forward earnings may seem steep, I would argue it’s a fair price for a company experiencing triple-digit growth and positioned to lead the AI revolution.
