Nvidia’s stock (NVDA) experienced a significant decline on Monday, dropping as much as 3.4% before recovering slightly, following reports of overheating issues with its latest Blackwell artificial intelligence servers. This news comes just days ahead of the company’s earnings report, which is scheduled for release after the market closes on Wednesday.
The overheating problems were highlighted in a report by The Information, raising concerns about the performance and reliability of Nvidia’s highly anticipated Blackwell AI chips. These chips are critical for Nvidia’s strategy to dominate the AI hardware market, and any production delays could have serious implications for the company and its clients.
This is not the first time Nvidia has faced challenges with its Blackwell products. In August, The Information reported that design flaws were impacting the individual chips. During its late August earnings call, Nvidia confirmed that production ramp-up for Blackwell chips would be delayed until the December quarter, rather than the previously expected September timeline. While the company has not publicly acknowledged any specific design flaws or overheating issues, it did state that engineering iterations are a normal part of product development.
Nvidia’s GB200 NVL72 server system, which incorporates 72 Blackwell chips along with 36 of its latest Grace CPUs, is touted as one of the most advanced computing systems available. CEO Jensen Huang has projected that these new chips will generate “several billion dollars” in sales during the fourth quarter. Major customers for the Blackwell server system include tech giants such as Meta Platforms (META), Microsoft (MSFT), and Elon Musk’s xAI.
Despite these reported issues, Dell Technologies CEO Michael Dell stated on social media platform X that his company is already shipping an unspecified number of Nvidia’s Blackwell servers as part of its PowerEdge System offerings. This indicates that some clients remain confident in Nvidia’s ability to deliver despite ongoing challenges.
Nvidia shares closed Monday down 1.3% at $140.15. Analysts are closely watching Nvidia’s upcoming earnings report, as even a strong performance could lead to further declines in stock price. For instance, after exceeding expectations in its last quarterly report, Nvidia shares fell by 6% immediately afterward.
Investor sentiment surrounding AI spending has shifted recently, with concerns that major tech companies may reduce their AI expenditures. This anxiety was evident last Friday when semiconductor stocks suffered declines after Applied Materials (AMAT) released disappointing earnings results. On that day, Nvidia shares dropped by 3.3%, paralleling a 3.4% fall in the PHLX Semiconductor Index (^SOX).
Despite these recent setbacks, Nvidia’s stock has surged approximately 186% over the past year, largely due to its pivotal role in the AI boom. The company’s impressive growth has allowed it to surpass Apple (AAPL) as the most valuable publicly traded company and replace Intel on the Dow Jones Industrial Average.
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