Back in March, Nvidia (NVDA) had some big news to share.
The chipmaker used its GTC event to unveil the Blackwell GPU architecture, which, Nvidia said, will “power a new era of computing.”
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The company said Blackwell will enable organizations to build and run real-time generative AI on trillion-parameter large language models at up to 25 times less cost and energy consumption than its predecessor.
“For three decades, we’ve pursued accelerated computing, with the goal of enabling transformative breakthroughs like deep learning and AI,” Jensen Huang, Nvidia’s co-founder and CEO, said in a statement.
“Generative AI is the defining technology of our time,” Huang added. “Blackwell is the engine to power this new industrial revolution. Working with the most dynamic companies in the world, we will realize the promise of AI for every industry.”
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Nvidia CFO sees ‘tipping point’
Nvidia currently boasts an estimated 80% share of the market for AI-powering processors.
The company used last month’s GTC event to unveil the newest iteration of its lineup, the Blackwell GPU architecture. This architecture could command a 40% premium to the current range for H100 chips, which go for between $30,000 and $40,000 each.
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Nvidia is scheduled to report first-quarter earnings on May 22. Analysts surveyed by FactSet expect the company to report $5.60 per share, on revenue of $24.75 billion.
A year ago, Nvidia posted earnings of $1.09 per share on revenue of $7.19 billion.
On Feb. 21, Nvidia beat Wall Street’s fiscal fourth-quarter targets, delivering its third quarter of triple-digit percentage growth in sales and earnings.
“The world has reached the tipping point of new computing era,” Colette Kress, Nvidia’s Chief Financial Officer told analysts during the company’s earnings call in February. “The $1 trillion installed base of data center infrastructure is rapidly transitioning from general-purpose to accelerated computing.”
Kress said that large cloud providers represented over half of Nvidia’s data center revenue during the quarter, supporting internal workloads and external public cloud customers.
“We are delighted that supply of Hopper architecture products is improving,” she said. “Demand for Hopper remains very strong. We expect our next-generation products to be supply-constrained as demand far exceeds supply.”
Advanced Micro Devices (AMD) , which reported earnings after the market close on April 30, is considered the only real rival to Nvidia’s global market dominance. Supply constraints for Nvidia could boost AMD’s newly minted MI300X chip sales.
Huang, the subject of a recent “60 Minutes” profile, told analysts that overall, “our supply is improving.”
“Our supply chain is just doing an incredible job for us, everything from, of course, the wafers, the packaging, the memories, all of the power regulators, to transceivers and networking and cables and you name it,” he said.
Wall Street analyst cites ‘robust demand’
People may think Nvidia GPUs are like chips, but Huang said the Hopper GPU has 35,000 parts and weighs 70 pounds.
“People call it an AI supercomputer for good reason,” said Huang. “If you ever look in the back of the data center, the systems, the cabling system, is mind-boggling. It is the most dense, complex cabling system for networking the world has ever seen.”
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While Nvidia provides guidance one quarter at a time, Huang told analysts, “Fundamentally, the conditions are excellent for continued growth in calendar ’24, to calendar ’25 and beyond.”
“We now have a new type of data center that is about AI generation, an AI generation factory,” he said. “And you’ve heard me describe it as AI factories. But basically, it takes raw material, which is data, it transforms it with these AI supercomputers that Nvidia builds, and it turns them into incredibly valuable tokens.”
UBS analyst Timothy Arcuri considered Blackwell when he raised the firm’s price target on Nvidia to $1,150 from $1,100 while keeping a buy rating on the shares.
In the wake of Nvidia’s Blackwell launch, the analyst tells investors in a research note that the firm’s supply chain work suggests the mix in 2025 may be much richer than the firm expected.
Despite potential shipment timing concerns, the firm highlighted the continuation of robust demand for Blackwell and Hopper products.
While Blackwell shipments are anticipated for December, UBS remains bullish on the sustained demand for Hopper, particularly emphasizing its strength ahead of a significant product transition.
Arcuri said the increased mix assumptions for Blackwell, driven by strong demand for GB200 server racks, indicate a strategic shift for Nvidia towards becoming a full-stack provider.
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