Nvidia Stock Update: Design Flaw Acknowledged by CEO

Nvidia Corp (NVDA) found itself facing a dip in its stock price on Wednesday. The decline followed comments made by Nvidia's CEO, Jensen Huang, to Reuters regarding a design flaw in its latest Blackwell AI chips. Huang noted that Taiwan Semiconductor Manufacturing Co (TSMC) played a crucial role in helping to fix this issue.

The issue with the Blackwell chips was identified shortly after their initial presentation in March. This flaw has led to significant production delays, which in turn have impacted major clients, including Meta Platforms Inc (META), Alphabet Inc (GOOG) and Microsoft Corp (MSFT).

In his admission, Huang accepted full accountability for the defect, which resulted in poor production yields. As previously reported, Nvidia is now aiming to ship the Blackwell chips in the fourth quarter of this year, a shift from their earlier goal of the second quarter.

A recent report indicated that Amazon.com Inc (AMZN) and its Amazon Web Services (AWS) are encountering delays in their data center projects due to the production issues linked with Nvidia’s Blackwell chips, with availability now pushed back to 2025.

In response to the changing landscape, Amazon has established a five-year partnership with the AI startup Databricks. This collaboration aims to offer businesses more cost-effective tools for AI development using Amazon's Trainium AI chips, which serve as a more affordable alternative to Nvidia's GPUs.

Despite these setbacks, Nvidia is expanding its operations globally, including plans to co-develop a custom AI chip in India and potential investments in Thailand.

Market analysts remain optimistic about Nvidia, even in light of the reported delays. Beth Kindig from the I/O Fund believes that Blackwell chips could be vital in propelling Nvidia to a $10 trillion market valuation by 2025. In addition, John Vinh from KeyBanc forecasts that these chips might contribute over $7 billion in revenue within the fourth quarter.

Positive sentiments for Nvidia’s future were echoed by Jim Cramer of CNBC and Dan Ives of Wedbush.

Over the past year, Nvidia shares have seen remarkable growth, appreciate by around 224%. Investors seeking to gain exposure to Nvidia's stock can do so through the SPDR S&P 500 ETF (SPY) and the iShares Core S&P 500 ETF (IVV).

Price Action: As of the latest report, NVDA stock had decreased by 2.69%, bringing its price to $139.82.

Nvidia, stocks, AI