In a setback for Nvidia (NVDA), the AI chipmaker is facing challenges as its top customers delay orders for its latest Blackwell GB200 racks due to overheating issues, according to an Information report. The report stated that the first shipments of these racks are overheating and have encountered glitches, prompting concerns among major clients. A rack is designed for data centers to house chips, cables, and essential equipment.
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Adding to the pressure, the U.S. government announced stricter export restrictions on AI chips and technology on Monday, potentially impacting the company’s international sales.
Glitches in NVDA Blackwell Chips Has Impacted Customer Orders
The glitches in Nvidia’s Blackwell chips have meant that tech giants like Microsoft (MSFT), Amazon Web Services (AMZN), Google (GOOGL), and Meta Platforms (META), who had collectively placed Blackwell rack orders exceeding $10 billion, have slashed some of their orders for the Blackwell GB200 racks. While some customers are opting to wait for improved versions of the racks, others are switching to the chipmaker’s older-generation AI chips.
For instance, Microsoft initially planned to deploy GB200 racks containing at least 50,000 Blackwell chips at its Phoenix facility. However, delays prompted OpenAI, a key partner of MSFT, to request the older-generation “Hopper” chips.
Despite these setbacks, Nvidia’s CEO Jensen Huang had remained confident last year that the company would surpass its fourth-quarter revenue target from Blackwell chips, projected at several billion dollars. It remains unclear how the order reductions will impact overall sales, as other buyers may emerge for the glitch-prone GB200 racks.
What Is NVDA Stock’s Price Prediction?
Analysts remain bullish about NVDA stock, with a Strong Buy consensus rating based on 36 Buys and three Holds. Over the past year, NVDA has skyrocketed by more than 100%, and the average NVDA price target of $177.42 implies an upside potential of 33.2% from current levels.
