Nvidia’s most advanced “superchip” has been put on hold by Amazon’s cloud computing division while awaiting a new, more powerful model. The company’s shares fell slightly in early trading as investors worried about a potential drop in demand between product cycles. The new generation of processors, called Blackwell, is expected to be twice as powerful for training large language models, such as OpenAI’s ChatGPT. Amazon Web Services confirmed that it has transitioned its previous orders for Nvidia’s Grace Hopper superchip to the Grace Blackwell successor.
While analysts anticipate a significant increase in sales for Nvidia in the most recent quarter, driven by big tech companies’ investments in artificial intelligence technology, some concerns have arisen regarding the sustainability of this growth streak. The production of the new Blackwell chips is expected to ramp up throughout the year, with deliveries projected for the fourth quarter.
The new Blackwell chip, GB200, will be the first product to take advantage of the Blackwell architecture. Analysts estimate that the GB200 chip, which includes two B100 chips, could cost up to $70,000, with a complete server carrying the new technology priced at around $3 million. Despite the potential air pocket in demand for AI chips highlighted by Citi analysts, Nvidia continues to provide other chips to cloud customers through AWS.
Nvidia has faced challenges in balancing supply and demand between product updates in the past, and recent concerns have emerged about potential delays in purchases as customers await the launch of Blackwell. Although demand for Nvidia’s H100 chips surged last year following the release of OpenAI’s ChatGPT, delays in delivery have since subsided. The company’s stock value has nearly doubled this year, although it has shown inconsistency following the Blackwell’s performance at the GPU Technology Conference in March.
Looking ahead, uncertainty remains about how Nvidia will manage the transition between chip generations, particularly with the increasing demand for chips suitable for gaming and cryptocurrency mining. However, analysts at Morgan Stanley express confidence in Nvidia’s ability to meet demand, emphasizing the interest from new cloud, enterprise, and sovereign customers in the existing Hopper chips.
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https://www.ft.com/content/75ac7f61-071a-437c-a35e-09f968c6a568