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Although there was a lot of excitement surrounding the launch of Nvidia‘S (NASDAQ: NVDA) latest chips based on the new Blackwell architecture, both customers and investors will apparently have to wait a little longer. According to reports, the shipment of the chips will be delayed, although it remains to be seen for how long.
Given the expected strong demand for the chips, let’s take a closer look at the issue and its potential impact on the stock.
Design error
As first reported by tech publication website The Information, a design flaw in the Blackwell B200 chip was discovered “unusually late” in the manufacturing process. The problem is believed to stem from the fact that the company was one of the first to use it Taiwanese semiconductor manufacturer‘s new CoWoS-L packaging technology (“Chip on Wafer on Substrate with a Local silicon interconnect”, if you’re curious) and the placement of the bridge dies connecting two graphics processing units (GPUs) isn’t perfect.
As a result, Nvidia has apparently decided to revamp the design of its Blackwell GPUswhich is expected to delay the start of shipments by three months or more, according to some reports. Customers and partners have indirectly confirmed the delays. Metaplatforms says it doesn’t expect any Blackwell GPUs this year Super microcomputer Executives say they don’t expect real volumes from Blackwell until the March quarter.
Alphabet, Microsoftand Meta all have huge Blackwell orders worth “tens of billions of dollars” that they want to fill, according to The Information.. This was already reported earlier this year Amazon moved its Nvidia AI accelerator orders from Hopper to Blackwell.
While Hopper’s orders will likely fill some of the gap left by the Blackwell delay, there is a risk of creating an air pocket if these customers continue to wait for their large orders.
However, UBS analysts have come out and said that after speaking to Nvidia customers, the company expects the chip delay to be only four to six weeks and that the delay will be “invisible” to most customers. This is much shorter than the initial slowdown reported, which lifted the shares from their recent lows.
Is it time to buy Nvidia stock?
The length of the delay for Blackwell will likely have a major impact on Nvidia in the short term. A short delay will likely be good for the stock and have little impact on 2025 results, while a delay of three months or more would be seen as unfavorable, especially after the idea of a shorter delay has already been floated by a Wall Street analyst. .
There’s also the question of whether the design flaw could cause a chip failure or if it just led to lower-than-expected production yields. Be that as it may, it seems like the company’s decision to delay production of the chip and fix any issues is a smart move.
Longer term, the bigger question surrounding the chip issues is whether Nvidia accelerated its development timeline too quickly. The company has reduced the planned development cycle for new chip architectures from two to one year. This should keep demand and prices high, but it’s also an aggressive schedule with limited room for errors or delays. Being at the forefront of new technology and delivering mass production of your products are two separate things that may not always coincide in the future. So these are some risks you need to take into account.
That said, with a number of customers having absolutely huge orders for its chips, demand isn’t an issue for Nvidia. Customers are currently more concerned about a backlog in the artificial intelligence (AI) race than overcapacity. As large language models (LLMs) become more sophisticated, they will require more and more computing power, which means more GPUs will be needed. For example, Meta said its Llama 4 LLM will likely require ten times the computing power of its previous version to train.
And that’s exactly the biggest reason to own Nvidia. With a dominant market position in GPUs, Nvidia will remain the biggest beneficiary of the continued push for more computing power.
At the same time, the stock trades at a price-to-earnings (P/E) ratio of about 30 times, based on analyst estimates from 2025. For a company with Nvidia’s growth and long-term prospects, that valuation is quite attractive.
NVDA PE ratio (1 year ahead) data Ygraphs.
So while there are risks to Blackwell’s delay, long-term investors can still buy Nvidia at current levels.
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Now that the Blackwell chips have been delayed, should investors postpone buying Nvidia stock? was originally published by The Motley Fool