Amazon has revised plans for some of it's Nvidia orders, choosing to wait for the eagerly anticipated Blackwell platform instead of utilizing its precursor, the Grace Hopper. News of this decision, disclosed by sources including Reuters and the Financial Times, has stoked concerns that Nvidia might endure a sales 'air pocket' as customers hold off purchases in favor of the forthcoming tech. However, industry analysts maintain their bullish stance on the AI frontrunner and affirm the strong demand for its offerings.
Amazon Web Services (AWS), Amazon's cloud platform, has adjusted its orders from Nvidia to hold out for Nvidia's forthcoming Blackwell super chip, rather than employing the Grace Hopper for a supercomputer project jointly developed by AWS and Nvidia. Nonetheless, AWS confirmed to Reuters that it still offers services rooted in Nvidia's Hopper chips.
Seven months after the GH200 Grace Hopper platform was launched in August 2023, Nvidia announced its next-generation system, Blackwell. Whilst the chipmaker has not confirmed a specific launch date, it has announced that the products will be available via partners such as Amazon, Microsoft, and Alphabet later in the year.
UBS analysts, commenting on the delayed AWS orders and Nvidia's imminent earnings report, highlighted that the unspecified timeline for the initial Blackwell shipment has raised investor concerns about the transition period. Citi analysts have also acknowledged investor anxieties over a possible drop in AI demand in the second half of 2024 as customers may defer purchases until the Blackwell systems are released, a move that could negatively impact Nvidia's sales.
However, market analysts largely discount these potential apprehensions, with both Barclays and Rosenblatt analysts dismissing the air pocket theory. Post the AWS announcement, CFRA analyst Angelo Zino told Investopedia he sees little risk of a significant deferment as AI server demand continues to exceed supply.
Although Nvidia has grappled with matching the surging demand due to the AI boom, analysts believe there is high demand for the new Blackwell products. It has even been suggested that Blackwell could be sold out well into 2025 whilst Hopper's supply improves.
Firstrade President, Don Montanaro, shared with Investopedia, that the endorsement of Blackwell could hardly be seen as bad news for Nvidia. Despite pockets of options trading clientele bracing for a short-term pullback post Nvidia's earnings announcement, clients generally appear confidently bullish long-term on Nvidia and the broader AI market.