{"id":59651,"date":"2024-08-26T06:00:40","date_gmt":"2024-08-26T10:00:40","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=59651"},"modified":"2024-08-26T13:11:48","modified_gmt":"2024-08-26T17:11:48","slug":"nvda-blackwell-delay-is-it-time-to-rotate-into-amd","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2024\/08\/nvda-blackwell-delay-is-it-time-to-rotate-into-amd\/","title":{"rendered":"NVDA\u2019 Blackwell Delay: Is It Time to Rotate Into AMD?"},"content":{"rendered":"<p><a href=\"https:\/\/quotes.ino.com\/charting\/?s=NASDAQ_NVDA\"><span style=\"font-weight: 400;\">NVIDIA Corporation (NVDA)<\/span><\/a><span style=\"font-weight: 400;\">, the AI darling, recently hit a rough patch. A<\/span><a href=\"https:\/\/www.theinformation.com\/articles\/nvidias-new-ai-chip-is-delayed-impacting-microsoft-google-meta\"> <span style=\"font-weight: 400;\">report<\/span><\/a><span style=\"font-weight: 400;\"> from The Information revealed that Nvidia\u2019s highly anticipated Blackwell series chips are delayed due to design flaws, causing a sharp 15% drop in the stock over the past week. Even with this dip, the stock is still up more than 170% over the past year, but as we know, past performance isn\u2019t a guarantee of future returns.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So, what\u2019s going on with Nvidia? And more importantly, is it time to consider alternatives?<\/span><\/p>\n<p><b>Dark Clouds Are Looming Over the Future of Nvidia<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Back in March, NVDA announced its Blackwell series, boasting capabilities that promised to build and operate real-time generative AI on trillion-parameter large language models at a fraction of the cost and energy consumption of its predecessor. But fast forward a few months, and the picture isn't as rosy.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to the report, the company has informed major customers, including tech giants like<\/span><a href=\"https:\/\/quotes.ino.com\/charting\/?s=NASDAQ_GOOGL\"> <span style=\"font-weight: 400;\">Alphabet Inc. (GOOGL)<\/span><\/a><span style=\"font-weight: 400;\"> and<\/span><a href=\"https:\/\/quotes.ino.com\/charting\/?s=NASDAQ_MSFT\"> <span style=\"font-weight: 400;\">Microsoft Corporation (MSFT)<\/span><\/a><span style=\"font-weight: 400;\">, that shipments of its Blackwell AI accelerator will be delayed by at least three months due to design flaws. It appears to involve Taiwan Semiconductor Manufacturing's new packaging technology, which NVDA is one of the first to use, and issues with the placement of bridge dies connecting two GPUs.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This isn\u2019t just a minor hiccup. The delay could throw off the plans of customers such as Microsoft and<\/span><a href=\"https:\/\/quotes.ino.com\/charting\/?s=NASDAQ_META\"> <span style=\"font-weight: 400;\">Meta Platforms, Inc. (META)<\/span><\/a><span style=\"font-weight: 400;\">, who have invested billions in Nvidia\u2019s new GPUs to drive their AI services. The worry is that these delays might prevent these companies from deploying large clusters of the new chips in their data centers by the first quarter of 2025, as they had hoped.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Design flaws aren\u2019t something that can be fixed overnight, which explains the significant delay. Nvidia, for its part, hasn\u2019t outright confirmed or denied the delays but did say that \u201cproduction is on track to ramp later in 2024.\u201d However, with only a few months left in the year, this sounds more like an early 2025 release.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The delay has led tech companies to look for alternatives from NVDA\u2019s competitors, such as<\/span><a href=\"https:\/\/quotes.ino.com\/charting\/?s=NASDAQ_AMD\"> <span style=\"font-weight: 400;\">Advanced Micro Devices, Inc. (AMD)<\/span><\/a><span style=\"font-weight: 400;\">. MSFT and GOOGL, for example, are already<\/span><a href=\"https:\/\/www.cnbc.com\/2023\/12\/06\/meta-and-microsoft-to-buy-amds-new-ai-chip-as-alternative-to-nvidia.html\"> <span style=\"font-weight: 400;\">working on next-generation products<\/span><\/a><span style=\"font-weight: 400;\"> with AMD.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While Nvidia still dominates the data center GPU market, the Blackwell delay could weigh on its stock price and reputation. It\u2019s arguably the most significant setback NVDA has faced since the AI boom began, and it might just be the moment for AMD to shine.<\/span><\/p>\n<p><b>The Future of Advanced Micro Devices<\/b><\/p>\n<p><span style=\"font-weight: 400;\">With a market cap of $3.18 trillion, NVDA\u2019s growth prospects seem more limited compared to AMD, which could see its valuation double from its current $250 billion as it gains momentum in the data center space.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In the second quarter, AMD\u2019s data center revenue<\/span><a href=\"https:\/\/ir.amd.com\/news-events\/press-releases\/detail\/1209\/amd-reports-second-quarter-2024-financial-results\"> <span style=\"font-weight: 400;\">surged 115% year-over-year<\/span><\/a><span style=\"font-weight: 400;\"> to $2.83 billion, accounting for nearly half of its total revenue. The Mi300 series brought in over $1 billion in quarterly revenue for the first time, with its customer base expanding as Microsoft became the first cloud provider to offer general availability for the Instinct Mi300X.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The significant increase in AMD\u2019s data center sales, driven by AI applications, is expected to boost profits further, as this segment typically yields higher margins. Additionally, the company's recent<\/span><a href=\"https:\/\/ir.amd.com\/news-events\/press-releases\/detail\/1210\/amd-completes-acquisition-of-silo-ai-to-accelerate\"> <span style=\"font-weight: 400;\">acquisition of Silo AI<\/span><\/a><span style=\"font-weight: 400;\">, Europe's largest private AI lab, will enhance its capabilities in generative AI, including inference, training, and large language models.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Furthermore, Advanced Micro Devices\u2019 client revenue rose 49% year-over-year to $1.49 billion, though with slimmer margins than its data center business. The recent drop in the gaming and embedded segments will likely bottom out soon, potentially lifting overall results. Even modest gains could significantly boost AMD's bottom line. The company reported net income of $265 million or $0.16 per share, up from $27 million or $0.20 per share recorded last year.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Investors are keen to see AMD<\/span><a href=\"https:\/\/www.cnbc.com\/2023\/06\/13\/amd-reveals-new-ai-chip-to-challenge-nvidias-dominance.html\"> <span style=\"font-weight: 400;\">challenge NVDA with its MI300X AI chip<\/span><\/a><span style=\"font-weight: 400;\"> and demonstrate growth in its data center AI business. On the other hand, Street expects its revenue and EPS for the current year (ending December 2024) to increase 12.9% and 27.6% year-over-year to $25.62 billion and $3.38, respectively. If AMD can exceed expectations, the stock could experience significant gains in the coming months. Earlier this year, the company<\/span><a href=\"https:\/\/ir.amd.com\/news-events\/press-releases\/detail\/1192\/amd-reports-first-quarter-2024-financial-results\"> <span style=\"font-weight: 400;\">projected $4 billion<\/span><\/a><span style=\"font-weight: 400;\"> in AI chip sales for 2024, representing about 15% of its expected revenue.<\/span><\/p>\n<p><b>Is It Time to Ditch NVDA and Buy AMD?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Delays in Blackwell chip could impact NVDA\u2019s market share and growth. If the delay is short, the stock might have minimal impact on its fiscal 2025 results. However, if it extends beyond three months, it could weigh heavily on the stock, especially as some analysts were anticipating a quicker resolution.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Additionally, concerns about whether the design flaw could lead to chip failures or affect production yields add to the uncertainty. Nvidia's decision to pause production and address the issue is a smart move, but it highlights the risks of its aggressive development timeline, which has been shortened from two years to one. While this strategy could pay off, it also increases the risk of errors or delays.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">On the other hand, AMD is well-positioned to benefit from NVDA's ongoing headwinds. With its MI300X AI chip gaining traction and strong data center growth, Advanced Micro Devices could capture some market share from Nvidia. Given this backdrop, it might be the right time to consider rotating out of NVDA and into AMD, especially for investors looking to capitalize on the AI-driven growth in the semiconductor sector.<\/span><\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>NVIDIA Corporation (NVDA), the AI darling, recently hit a rough patch. A report from The Information revealed that Nvidia\u2019s highly anticipated Blackwell series chips are delayed due to design flaws, causing a sharp 15% drop in the stock over the past week. Even with this dip, the stock is still up more than 170% over [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":41,"featured_media":56909,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[34664,32228,32172,34663,32229,32092,32091,32033,31933,34662,1808,34665,34666],"class_list":["post-59651","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-acquisition-of-silo-ai","tag-advanced-micro-devices","tag-alphabet-inc-googl","tag-challenge-nvda-with-its-mi300x-ai-chip","tag-inc-amd","tag-inc-meta","tag-meta-platforms","tag-microsoft-corporation-msft","tag-nvidia-corporation-nvda","tag-projected-4-billion","tag-report","tag-surged-115-year-over-year","tag-working-on-next-generation-products"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>NVDA\u2019 Blackwell Delay: Is It Time to Rotate Into AMD? - INO.com Trader&#039;s Blog<\/title>\n<meta name=\"description\" content=\"NVIDIA (NVDA) has hit a snag with its Blackwell series chips, which will be delayed until early 2025. 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