Nvidia's reported Blackwell chip delay is 'hardly fatal'

Among a broad market sell-off, tech stocks were among the worst performers — and Nvidia (NVDA) may be partly to blame. The chip giant is reportedly facing a delay in its Blackwell AI chips as investors anxiously await returns on AI investments. Wall Street Journal tech columnist Dan Gallagher joins Asking for a Trend to discuss the AI race and how a delay Nvidia's Blackwell chip may impact the chip giant.

"It was going to always take a while for generative AI to build up into some kind of business, if it builds up. But all the investment for it has to come before that. And this is a lot of investment, billions and billions of dollars into buying these GPUs, building these new data centers. And so, I think there was always going to be these periods where the spending was going to really outweigh any kind of business or revenue story," Gallagher explains.

He notes that despite a possible delay in Nvidia Blackwell chips due to design and performance issues, "a three-month delay is hardly fatal." He explains, "They are ahead of the competition by years. So if it turns out to be like the Blackwell comes out two or three months late, it's really just kind of shifting a little bit of revenue I think more than anything that's fatal." Gallagher adds that across the board, he expects chipmakers to have ambitious goals and move very fast, potentially hitting roadblocks along the way.

For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.

This post was written by Melanie Riehl

Video transcript

In today's broad market selloff.

Tech stocks were among the worst performers and NVIDIA maybe to blame the information report over the weekend.

NVIDIA State of the Art Blackwell A I chip is facing delays.

The report rattled tech names at the open but the tech heavy, NASDAQ did manage to pair some of those earlier losses closing down more than 3% with me.

Now to talk about all this is Dan Gallagher columnist for the Wall Street Journal's heard on the street, Dan, it is great to, to see you kinda wanna actually start bigger picture Dan because you've been following the markets for, for a long time and just get your take on kind of action we've seen in Big Tech because, you know, got hammered today.

But it wasn't just today, Dan, I mean, when we made our way through this earnings season, it was just interesting the way investors seem to have some new questions about Big Tech and, and that mega trend of A I Dan, they, they seem to be saying it, it's great that folks are testing A I and experimenting with it.

But you know, where's the usage?

Where's the monetization where, where are the returns?

Dan.

Uh Yeah, I think that really summed up the uh discerning season really well.

And it was, it was kind of unsurprising if you think about it because, you know, it was going to always take a while for general A I to build up into some kind of business if it builds up, but all the investment for it has to come before that.

Um And this is a lot of investment, billions and billions of dollars into buying these GP us building these new data centers.

And so there was, I think there was always going to be these periods where the spending was gonna really outweigh the any kind of business or revenue story.

We definitely saw that in this one, all four, I'll call them four kind of A I giants and that's Microsoft alphabet, Amazon and Meta.

Um you know, had that, that was the theme of all their reports and three of those four companies, their stocks pretty much has fallen and, and stayed down since they reported meta is the only one that's up.

And what, what, what was different about Meta Dan because yeah, they reported stock popped.

Why did investors give meta the past there?

What, what sort of the the distinction?

What's the differentiation?

Uh I think there's a few things, one, I think they had the stronger report out of those four because the others, if you, especially if you nitpicked a bit um, they had, you know, some misses in certain segments that kind of like, blunted the overall story.

I mean, none of them were really bad reports but they all, you know, alphabet missed on that youtube advertising, Amazon ad misses across almost everything except the cloud.

Um, Meta had like a pretty clean report strong beats against the expectations.

And that stock is the one the only one that was down from, from the March quarter reports because if you recall three months ago, um Metas stock really took a hit because that's when they first signaled all the spending they were going to do.

Um So honestly, they kind of paid the price early, I think.

And Dan, let's talk about NVIDIA too.

I want your take on that name got hit today.

Um We did see those reports uh could be delaying Blackwell.

What, what did you make of those reports?

Dan, and, and what should you know, investors right now if they're in NVIDIA, what, what was your takeaway?

I think one, we kind of there was already some smoke in this area about, you know, buzz about, you know, issues with the design and how the performance was doing.

Possibility could be delayed.

We saw that with a MD two.

So it wasn't terribly surprising we're seeing this and honestly, a three month delay is hardly fatal for NVIDIA.

They are ahead of the competition by years.

So if it turns out to be like the black will comes out two or three months late.

Um It's really just kind of shifting a little bit of revenue, I think more than anything that's fatal.

Um What I do think um is going to be important to keep in mind though is, and video is trying to do essentially do new chips at a cadence that you we've not really seen in the segment before.

They're trying to do something new every year, which is kind of like a smartphone cadence.

That's typically not what we've seen with data centers, especially these kinds of like super powerful super computing type chips.

So what they're trying to do is super ambitious.

I think we're going to see a lot more periods like this, both not just with them but with other chip makers or they're trying to move very fast.

Um And there's gonna be probably some stumbles and obstacles they hit along the way.

Dan.

Great to have you on the show.

Thanks so much for taking the time to chat.

Appreciate it.

Thanks for having me.