Nvidia slips as Wall Street digests Blackwell architecture unveiling

Shares of Nvidia (NVDA) are under pressure on Tuesday morning following the company’s presentation of its new generation of artificial intelligence chips and a new platform called Blackwell. Nvidia CEO Jensen Huang presented the new chips to a packed crowd at Nvidia’s GTC event, noting that the first Blackwell chip, GB200, is expected to ship later this year.

Commenting on the kickoff of the flagship conference, JPMorgan said that the company “continues to be 1-2 steps ahead of its competitors.” A similar opinion was voiced by BofA, which added that while the announcements “were within expectations,” they had “sizzle and substance” as the company continues to fundamentally widen its competitive moat.

BLACKWELL PLATFORM: Nvidia announced that the Nvidia Blackwell platform has arrived. The Blackwell GPU architecture features six technologies for accelerated computing, which will help unlock breakthroughs in data processing, engineering simulation, electronic design automation, computer-aided drug design, quantum computing and generative AI. Among the many organizations expected to adopt Blackwell are Amazon Web Services (AMZN), Dell Technologies (DELL), Google (GOOGL), Meta (META), Microsoft (MSFT), OpenAI, Oracle (ORCL), Tesla (TSLA) and xAI.

Additionally, Nvidia announced its next-generation AI supercomputer – the Nvidia DGX SuperPOD powered by Nvidia GB200 Grace Blackwell Superchips – for processing trillion-parameter models with constant uptime for superscale generative AI training and inference workloads. The company also presented a new wave of networking switches, the X800 series, designed for massive-scale AI.

AHEAD OF COMPETITION: Keeping an Overweight rating on Nvidia after the company hosted its keynote as part of its GPU Technology Conference, JPMorgan notes that its B200 GPU chips show strong performance gains over prior H100 GPU chipset with 2.5-times training improvement and 5-times inference improvement. Further, JPMorgan believes Nvidia is well positioned to continue to benefit from major secular trends in AI, high-performance computing, gaming, and autonomous vehicles. The company “continues to be 1-2 steps ahead of its competitors,” the firm added.

SIZZLE AND SUBSTANCE: BofA says the announcements made by Nvidia at the start of its flagship GTC conference “were within expectations,” but had “sizzle and substance” as the company continues to fundamentally widen its competitive moat in a multi-trillion-dollar IT and Infrastructure service industry. Among the slew of product and partner announcements were the new Blackwell silicon/server/system platform that scale AI training and inference performance by up to 4-times and 30-times, respectively, over prior-gen Hopper and now enable genAI on trillion-parameter size LLMs, as well as new 800G back-end switch offerings on both Ethernet and InfiniBand, noted the firm, which maintains a Buy rating and $1,100 price target on Nvidia, its top compute pick.

Morgan Stanley also notes there “were no big surprises” during CEO Jensen Huang’s keynote as part of Nvidia’s GPU Technology Conference, but says that Blackwell performance claims highlighted the “impressive” and says that the performance of the Blackwell family “will raise the bar yet again.” Despite all that has happened in the last 18 months, it is clear from the GTC keynote that Nvidia believes it is “still early when it comes to unlocking the potential of generative AI” and the company also continues to push forward in services, omniverse, and robotics, says the firm, which continues to prefer Nvidia over other AI contenders and keeps an Overweight rating and $795 price target on the shares.

NO TAM EXPANSION: KeyBanc points out that despite some anticipation that Nvidia would increase the $1 trillion total addressable market for accelerated computing at the developers conference, the company maintained it. Announcements from the keynote were largely in line with expectations, with Nvidia announcing its next-generation GPU architecture Blackwell and noting the size of the chip was 2-times that of H100, the firm tells investors in a research note. KeyBanc is encouraged by the announcements as it views them as reinforcing Nvidia’s leadership position in generative artificial intelligence. The firm also anticipates the average selling price and performance uplift from Nvidia’s news products will sustain its outsized earnings growth. KeyBanc keeps an Overweight rating on the shares with a $1,100 price target.

TARGET RAISES: On the heels of Nvidia’s keynote address, Susquehanna raised the firm’s price target on the shares to $1,050 from $850, while keeping a Positive rating on the shares. The firm notes that Blackwell has 5-times the AI performance and 4-times the on-die memory of Hopper.

Wells Fargo also raised the firm’s price target on Nvidia to $970 from $840 and kept an Overweight rating on the shares after attending the arena packed GTC 2024 keynote by the company’s CEO Jensen Huang. While Nvidia once again highlighted its full stack/platform differentiation, the firm thinks some may have anticipated a bit more out of the Blackwell B200 launch. That said, Wells thinks Nvidia’s presentation did solidly reinforce its long-standing positive thesis in the company’s full stack/accelerated compute platform differentiation, which continues to include expanding monetization opportunities.

POSITIVE TAKE ON SUPERMICRO: Barclays notes that Supermicro (SMCI) announced a range of AI server products immediately after Nvidia unveiled the new Blackwell GPU architecture at the start of the company’s GTC tradeshow. Supermicro aims to be first to market for new AI servers equipped with B100, B200 and GB200 chips with liquid-cooled systems, noted the analyst, who continues to highlight time to market as the “strongest moat” for Supermicro.

The firm, which also notes that Supermicro separately announced a 2M share secondary offering that the firm estimates will generate around $2B in net proceeds assuming the green-shoe, views the equity offering as “a positive signal” despite low-single digit dilution. The firm keeps an Overweight rating and $961 price target on Supermicro shares, which are down about 11% to $892 in Tuesday morning trading.

PRICE ACTION: In Tuesday morning trading, shares of Nvidia have dropped 2% to $866.82. Also lower are peers AMD (AMD) and Intel (INTC), whose shares are sliding almost 7% and 3% to $178 and $41.68, respectively.