NVIDIA Corporation (NVDA) recently delivered an outstanding earnings report for Q3 (October), but its shares have been experiencing slight turbulence. Although the stock briefly traded above its flatline after the positive Q3 results, it closed approximately -2.5% lower on Wednesday. This downward trend is persisting, with one of the lightest trading volume days of the year, following a Reuters report that NVDA is postponing the launch of its China-focused AI chips until the first quarter of 2024. This report comes as a surprise, considering NVDA’s Q3 conference call held just the previous day, where no mention was made of this potential delay.
Delay in China-Focused AI Chips
The recent news of a delay in NVDA’s China-focused AI chips has raised concerns among investors. It is worth noting that the delay is minor, and the H20 chip referred to in the Reuters report appears not to require a license for export, unlike some of NVDA’s other chips. However, this development could have broader implications.
Significance of the China Market
China is a crucial market for NVDA, accounting for approximately 20-25% of its Data Center revenue, which translates to about 16-20% of the company’s overall revenue. Despite strong Q4 revenue growth guidance of +230% year-over-year, management indicated that this figure could have been even higher if not for U.S. export restrictions. This setback may have contributed to the market’s initial reaction to the delay.
Competition from Huawei
Delays in NVDA’s product shipments to China could potentially provide an opening for China-based tech giant Huawei to make further advances in the market. Huawei has been actively developing AI chips for nearly five years and recently unveiled a chip designed for AI purposes, boasting impressive performance figures. However, NVDA still maintains a dominant position, primarily due to its first-mover advantage and widely-used software ecosystem among developers. Nevertheless, a continued pattern of NVDA delays or stricter U.S. restrictions could shift the competitive landscape in Huawei’s favor.
Minor Hiccup in NVDA’s Journey
Bottom-line: The slight decline in NVDA’s stock price today appears to be more a reaction to the unexpected delay in U.S.-compliant chips shipping to China than the delay itself. The fact that management did not address this during the Q3 conference call added to the market’s surprise. However, NVDA’s Q4 guidance suggests that strong demand for AI will offset the impact of U.S. export restrictions. The key question is whether this can continue if delays become a recurring issue. Despite today’s setback, Reuters reports that NVDA is still expected to ship its China-designed chips by March of next year, indicating that today’s news may be a minor hiccup in NVDA’s quest to dominate the global generative AI market.
- Hoth Therapeutics breakthrough! 🧬✨ Why one patient sent Hoth Therapeutics stock forecast soaring by 81% in a single day! - September 8, 2024
- BloomZ Stock Price Just Exploded! Here’s the scoop on their latest alliance and why investors are excited 💥 - September 8, 2024
- The 10-year Treasury rate chart shows a surprising twist… Did hedge funds miscalculate with their record shorts? 🤔 - September 8, 2024
💥 GET OUR LATEST CONTENT IN YOUR RSS FEED READER
We are entirely supported by readers like you. Thank you.🧡
This content is provided for informational purposes only and does not constitute financial, investment, tax or legal advice or a recommendation to buy any security or other financial asset. The content is general in nature and does not reflect any individual’s unique personal circumstances. The above content might not be suitable for your particular circumstances. Before making any financial decisions, you should strongly consider seeking advice from your own financial or investment advisor.
