TLDR:
- Nvidia’s Blackwell B200 chip shipments are delayed due to a design flaw, with estimates ranging from 4-6 weeks to 3 months or more.
- Despite the delay, many analysts remain bullish on Nvidia, with UBS expecting the delay to be “invisible” to most customers.
- Nvidia’s forward P/E ratio of about 30 times based on 2025 estimates is seen as attractive given its growth prospects.
- Applied Materials, a key Nvidia supplier, posted strong Q3 results with earnings of $2.12 per share, beating estimates of $2.03.
- Analysts have raised price targets for Applied Materials, with JPMorgan setting a target of $250 and maintaining an overweight rating.
Nvidia, the leading graphics processing unit (GPU) manufacturer, is facing delays in the shipment of its latest Blackwell B200 chips due to a design flaw discovered late in the production process.
The delay, initially reported to be three months or more, has since been estimated by some analysts to be as short as four to six weeks. This setback comes at a time when demand for AI chips is at an all-time high, with major tech companies like Meta Platforms, Alphabet, and Microsoft placing orders worth “tens of billions of dollars.”
The design issue is believed to stem from Nvidia being one of the first to use Taiwan Semiconductor Manufacturer’s new CoWoS-L packaging technology. While the delay has caused some concern among investors, UBS analysts suggest that it will be “invisible” to most customers. This optimistic outlook has helped lift Nvidia’s stock off its recent lows.
Despite the setback, many analysts remain bullish on Nvidia’s long-term prospects. The company’s dominant position in the GPU market makes it a prime beneficiary of the growing demand for computing power in AI applications. For instance, Meta has stated that its next-generation large language model, Llama 4, will likely require ten times the computing power of its predecessor to train.
Nvidia’s stock currently trades at a forward price-to-earnings (P/E) ratio of about 30 times based on 2025 analyst estimates. Given the company’s growth potential and long-term prospects in the AI industry, many consider this valuation attractive.
While Nvidia navigates these challenges, its key supplier, Applied Materials, has posted strong financial results. The semiconductor equipment manufacturer reported earnings of $2.12 per share for its fiscal third quarter, beating analysts’ estimates of $2.03. Revenue hit $6.78 billion, also surpassing expectations.
Applied Materials CEO Gary Dickerson emphasized the importance of energy-efficient compute performance in the race for AI leadership. The company anticipates continued strong demand related to AI and data center computing, projecting revenue of $6.93 billion for the current quarter, a 3% year-over-year increase at the midpoint.
Following these results, several analysts have raised their price targets for Applied Materials. JPMorgan analyst Harlan Sur increased the target to $250 from $240, maintaining an overweight rating. Sur cited “solid July quarter results driven by accelerating demand” and believes the company will benefit from upcoming technology advancements.
For investors, the current situation presents both opportunities and risks. Nvidia’s temporary setback could provide an entry point for those bullish on the company’s long-term prospects in AI.
However, the potential for further delays or production issues should not be overlooked. Applied Materials, with its strong financial performance and lower valuation compared to Nvidia, may offer a more stable investment option in the semiconductor space.
