NVIDIA Faces Setback as Citi Cuts Estimates Amid AI Chip Delay Reports
2 Sources
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[1]
NVIDIA's Double Whammy Sees Citi Cut Estimates After Purported AI Chip Delay
This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. Amidst a global rout of equities and technology stocks, NVIDIA's shares were dealt another blow after Citi reduced its 2025 sales estimate for NVIDIA and removed the shares from its 30 day catalyst watch. The bank kept its $150 share price target for NVIDIA and a Buy rating, adding that the feverish demand for the firm's H100 and H200 chips could help it mitigate some of the impact from the purported Blackwell delay. An NVIDIA statement given to Wccftech earlier had refused to comment on rumors and shared that Blackwell was on track to ramp up in the second half of this year. An hour before trading, its shares had lost 14% in pre market, as they led the broader technology sector's declines. The current volatility in US equities follows after a worrying jobs report last week coupled with an interest rate hike in Japan, which became the latest in the upset of the delicate link of variables that underpin the global financial system. Over the weekend, Warren Buffett's Berkshire Hathaway also cut its stake in Apple, indicating to some investors that Buffett is now holding hundreds of billions of dollars in cash as he anticipates a recession on the horizon. For NVIDIA, whose shares have lost more than 20% since they peaked earlier this year to allow it to become the most valuable company in the world, August has come with a double whammy of sorts. After an earlier report claimed that its leading edge Blackwell AI processors might be delayed, the stock was caught up in the current storm surrounding technology equities with the latest report from Citi further adding to its woes. According to Citi, a potential three month delay in NVIDIA's Blackwell chips can lead to some customers "increasing their demand of H100/H200" chips, which should help NVIDIA mitigate the impact of the sales decline in its quarter ending January 2025. The bank keeps its estimates of NVIDIA sales for this year's quarters intact, and it has shifted its January 2025 quarter NVIDIA Blackwell sales estimate by 15%. Citi believes NVIDIA will lead the AI GPU market in the long term by commanding a 90% market share, but in case the delay materializes, the company's smaller rival AMD could end up benefiting. Since the bank believes that any impact on the January sales will be shifted forward to the April quarter, it is leaving its "FY26 (CY25) estimates mostly unchanged and now assume[s] potential US restrictions on B20 AI GPUs shipped to China next year." The report that had claimed a delay for NVIDIA's Blackwell chips also highlighted that the firm had informed some of its largest customers about the delay. Another report in the Chinese press had outlined that NVIDIA's manufacturing partner TSMC had purportedly spotted a problem with the chip's interconnect, and an NVIDIA statement in response had noted that "Hopper demand is very strong, broad Blackwell sampling has started, and production is on track to ramp in 2H. Beyond that, we don't comment on rumors."
[2]
Nvidia sinks as Citi removes catalyst watch, cuts estimates amid Blackwell delay
Nvidia (NASDAQ:NVDA) was in focus on Monday as U.S. technology stocks sank for a variety of reasons, including a report that the chip giant has delayed the release of its new Blackwell line of graphics processing units to its customers. As such, Citi lowered its sales estimates for the 2025 fiscal year. Nvidia shares fell 10% in premarket trading. Given that the demand for chip usage related to artificial intelligence has not slowed down, Citi analyst Atif Malik said customers increasing their demand for H100 and H200 could help Nvidia "partially offset" any decline related to the reported delay, which could be as long as three months. Malik cut his fiscal 2025 revenue estimates by 5% but kept his fiscal 2026 estimates unchanged, as he believes any sales will likely just be pushed out by a quarter. Malik reiterated his Buy rating and $150 price target on Nvidia, but removed his 30-day catalyst watch on the stock. Nvidia is likely to remain the leading company in the AI GPU space, with roughly 90% of the market. However, any delay could help AMD (AMD) become a stronger second source, Malik added. Nvidia is set to report its own quarterly results later this month. A consensus of analysts expect the company will earn $0.82 per share on $28.5B in revenue.
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NVIDIA's stock takes a hit as Citi removes it from catalyst watch and lowers estimates. Reports suggest a delay in the launch of NVIDIA's next-gen AI chip, Blackwell, impacting market expectations.
NVIDIA's Stock Stumbles on AI Chip Delay Reports
NVIDIA, the leading graphics processing unit (GPU) manufacturer, is facing a significant setback as reports emerge of a potential delay in the launch of its next-generation AI chip, codenamed Blackwell. This news has prompted financial analysts to reassess their outlook on the company, leading to a notable impact on NVIDIA's stock performance
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.Citi's Downgrade and Market Reaction
In response to the reported delay, Citi has taken decisive action by removing NVIDIA from its catalyst watch and lowering its estimates for the company. This move by a major financial institution has sent ripples through the market, causing NVIDIA's stock to sink
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.The Blackwell Delay: Implications for NVIDIA
The Blackwell chip, NVIDIA's highly anticipated next-generation AI processor, was expected to be a game-changer in the artificial intelligence and machine learning sectors. The reported delay in its launch could have far-reaching consequences for NVIDIA's market position and financial performance
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.Financial Projections and Analyst Concerns
Citi's analyst, Atif Malik, has adjusted his projections for NVIDIA in light of the Blackwell delay. The revised estimates suggest a potential impact on NVIDIA's revenue and earnings for the upcoming fiscal years. This adjustment reflects growing concerns about NVIDIA's ability to maintain its dominant position in the AI chip market in the face of increasing competition
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.Market Competition and Future Outlook
The delay of the Blackwell chip could potentially open the door for NVIDIA's competitors to gain ground in the rapidly evolving AI chip market. Companies like AMD and Intel, who have been working on their own AI-focused processors, may see this as an opportunity to narrow the gap with NVIDIA
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Investor Sentiment and Stock Performance
The news of the potential delay and Citi's subsequent actions have had an immediate impact on investor sentiment. NVIDIA's stock price has experienced a decline, reflecting the market's reaction to the uncertainty surrounding the company's near-term prospects
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.NVIDIA's Response and Future Strategy
As of now, NVIDIA has not officially commented on the reported delay of the Blackwell chip. Investors and industry observers are keenly awaiting any statement from the company that might provide clarity on the situation and outline NVIDIA's strategy to address these challenges
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