Nvidia, the prominent chipmaker, saw its stock price increase by nearly 2% to $901 after announcing the expected shipment of its new flagship AI processor, Blackwell, later this year.
This announcement was made by CEO Jensen Huang and CFO Colette Kress during the company’s annual developer conference in San Jose, California.
Despite an earlier dip in the stock price by nearly 4%, the news buoyed investor confidence.
Kress highlighted the company’s timeline for the new AI chip’s market debut, which had been introduced a day earlier.
Huang emphasized Nvidia’s ambition in the data center market, estimating a potential spending of over $250 billion annually on upgrading data centers with Nvidia’s specialized accelerated computing components.
This market is anticipated to grow by as much as 25% a year, with Nvidia aiming to shift from selling single chips to total systems, capturing a larger market share within data centers.
“Nvidia doesn’t build chips, it builds data centers,” Huang remarked, underscoring the company’s strategic pivot.
“The Blackwell processor, described as combining two silicon squares the size of Nvidia’s previous offerings, comes with a suite of software tools designed to facilitate the sale of artificial-intelligence models.
Nvidia is collaborating with TSMC to mitigate packaging bottlenecks that had previously hampered shipments.
Huang reassured stakeholders of better visibility into the demand for Blackwell chips this time around.
Despite the Blackwell chip’s introduction, analysts noted that its market impact might already be priced into Nvidia’s stock.
Huang disclosed that the chip would be priced between $30,000 and $40,000, with variations depending on the system’s value.
Skeptics like David Wagner from Aptus Capital Advisors pointed out the challenges of living up to high expectations, despite acknowledging Blackwell’s significant performance improvements over its predecessor, Hopper.
Nvidia is also working with South Korean chipmakers, including Samsung Electronics, to source high bandwidth memory (HBM) chips, despite Samsung’s HBM3 series not yet passing Nvidia’s qualification.
Meanwhile, SK Hynix announced the mass production of next-generation HBM3E chips, expected to be supplied to Nvidia.
Amid AI-driven market excitement, Nvidia’s stock has more than tripled in the past year, positioning it as the third-most valuable U.S. company, behind Microsoft and Apple.
Despite a high price-to-earnings ratio, analysts have increased their future earnings estimates for Nvidia, hinting at sustained investor optimism.
Morningstar analysts have raised their data-center revenue forecasts for Nvidia, citing its unmatched hardware in the AI industry and expansion into additional hardware, software, and networking products.
Despite expectations of a slight market share decline due to competition and customer shifts towards in-house chip production, Nvidia’s dominance in the sector appears secure, driven by its efforts to adapt its hardware for broader generative AI integration.