To The Moon

Might Blackwell be delayed?

Nvidia’s recent earnings report highlights both impressive financial performance and the anticipation surrounding its next-generation Blackwell architecture. For the fiscal quarter ending October 27, 2024, Nvidia reported revenue of $35.08 billion, a 94% increase from the same period the previous year, and net income more than doubled to $19.31 billion. Adjusted earnings per share were 81 cents, surpassing Wall Street’s expectations of 75 cents. 

Despite these strong results, Nvidia’s stock experienced a slight decline in after-hours trading, which some analysts attribute to modest guidance for the upcoming quarter. The company forecasted fourth-quarter revenue of approximately $37.5 billion, slightly above the expected $37.09 billion. 

A significant focus during the earnings call was the Blackwell graphics processing unit (GPU), Nvidia’s forthcoming AI chip. Production shipments of Blackwell are scheduled to begin in the current fiscal fourth quarter and will continue to ramp into fiscal 2026. Both Hopper and Blackwell systems are facing supply constraints, with demand for Blackwell expected to exceed supply for several quarters in fiscal 2026. 

Earlier reports indicated potential delays in Blackwell’s release due to design adjustments, which could push the earnings boost from the architecture to the second half of the year. However, Nvidia’s leadership has expressed confidence in meeting the high demand for Blackwell, emphasizing that production is in full swing and that they plan to deliver more Blackwell units than previously estimated in the upcoming quarter. 

In summary, while Nvidia’s latest earnings report showcases robust financial health and a positive outlook, the company faces challenges in scaling Blackwell production to meet the surging demand in the AI sector.

Several Blackwell suppliers like$Astera Labs, Inc.(ALAB)$  and $SUPER MICRO COMPUTER INC(SMCI)$  have just reported and seem to indicate one common thing. Earnings boost seems to be pushed out to the second half of the year. This to me seems to suggest that Blackwell might be delayed. Of course this is just what seems to be the vibe coming from the earnings report of these important suppliers and there is no official public announcements or acknowledgment as yet. But these to me are important to front foot any sudden price movements. And with technicals seeming to indicate either a possible wave C down or a continuation of an ending diagonal upwards, I have decided to be extra cautious and go a hundred percent hedged.

$Alpha & Omega Semiconductor(AOSL)$  price pattern also had me thinking. Winning the contract to supply the power modules for the B300 architecture should have sent the price flying but after a brief spike, sellers came in to push the price down hard. The only narrative I can think of is the delay of Blackwell and the latest earning reports and commentaries of management from these important supplying companies seem to suggest that. Now I am waiting for $Vertiv Holdings LLC(VRT)$  to report. Being a pure direct liquid cooling play that is integral to Blackwell, if management guides similar to only an earnings boost from second half of the year onwards, I would stay fully hedged to guard against a sudden drop in semiconductor related stocks especially tied to AI and Nvidia. I believe the prices after that correction will be the bottom to ride for the Blackwell boost later.

Please take note these are my observations only and should not be taken from face value but the technical setup is there as well as a possible narrative from the fundamentals point of view. As such I will be fully defensive until the market decides which direction it wants to take.

Disclaimer: Please kindly do your own due diligence as this is a sharing article and in no means financial advise.

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Thanks for reading my commentary. Hope it helps!

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