Amazon halts orders for Nvidia’s ‘superchip’ while waiting for the updated model

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Amazon’s cloud computing division has suspended orders for Nvidia’s most advanced “superchip” pending a new, more powerful model, as investors fear a drop in demand between the chipmaker’s product cycles. 2.3 trillion dollars.

The Silicon Valley-based chipmaker introduced a new generation of processors called Blackwell in March, just a year after its predecessor Hopper began shipping to customers. Nvidia CEO Jensen Huang said the new products would be twice as powerful for training large language models, the technology behind OpenAI’s ChatGPT.

Amazon Web Services, the world’s largest cloud computing provider, told the Financial Times that it had “completely transitioned” its previous orders for Nvidia’s Grace Hopper superchip, which launched in August, and replaced them with its Grace Blackwell successor. .

The company said the move “made sense” given “that the window between Grace Hopper and Grace Blackwell was small.”

Nvidia declined to comment ahead of its quarterly earnings report on Wednesday, citing quiet period rules.

Nvidia shares fell about 1 percent in early trading Tuesday.

Analysts expect the chipmaker to report sales tripled in its most recent quarter, driven by a spending spree by big tech companies on artificial intelligence technology. But some investors have begun to wonder how long it can maintain its extraordinary growth streak.

While big tech companies have pledged to continue investing tens of billions of dollars in building data center infrastructure for AI this year, “there is anxiety (on Wall Street) about a pause in the face of Blackwell,” they wrote. Morgan Stanley analysts in a note to clients this week.

Production of the new Blackwell chips will increase throughout this year. Analysts expect them to be delivered in the fourth quarter. Meanwhile, Citi analysts flagged a “potential air pocket” in demand for AI chips, after last year’s long wait times for Nvidia chips dissipated.

Chips based on Nvidia’s Hopper architecture, such as its coveted H100 graphics processing units, entered full production in September 2022. The Grace Hopper superchip, also known as GH200, includes multiple H100 GPUs along with high-end memory. speed, connectivity and a central. processing unit.

Its successor, the GB200, is the first product to take advantage of Blackwell.

Neither Amazon nor Nvidia confirmed the value of the order. HSBC analysts have estimated that a GB200 chip, which includes two B100 chips, will cost up to $70,000, and the price of a complete server carrying the new technology will rise to $3 million.

AWS continues to offer other Nvidia chips, including the H100, to its cloud customers. But as one of Nvidia’s largest customers, AWS’s move is likely to worry investors who are already concerned that technology companies will delay purchases while they wait for Blackwell’s launch.

Dollar Stock Price Line Chart Showing Nvidia Stock's Difficulty Maintaining Momentum

For much of last year, demand for Nvidia’s H100 chips far outstripped supply as the launch of OpenAI’s revolutionary ChatGPT triggered a wave of investment in AI infrastructure from cloud and internet companies, startups and corporate buyers. .

But since early 2024, long waits for delivery of H100 chips have eased.

Although Nvidia stock has nearly doubled in value since the beginning of the year on investor confidence about demand for AI chips, the stock has struggled to show a consistent rise since the chipmaker’s GPU Technology Conference in March, where the Blackwell performed.

Nvidia has struggled in the past to manage supply and demand smoothly between product updates. Recent increases in demand for chips suitable for gaming and cryptocurrency mining during the Covid-19 pandemic were soon followed by a glut of GPUs.

Analysts at Morgan Stanley said they were confident that even if Nvidia’s supply of next-generation chips became more available now, “in the meantime we are seeing new cloud, enterprise and sovereign customers taking up all of Hopper’s available supply.”

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