Nvidia's Unexpected 35% Stock Plunge Amid Chip Delay Could Set The Stage For A Surprising Turn In Stock Performance

• Nvidia has postponed the launch of its new AI chip, the Blackwell B200, due to a design flaw.
• The delay impacts major cloud service providers like Microsoft, Google, and Meta.
• Nvidia's stock has experienced volatility, dropping 35% from a June 2024 high of $140 to $90 in August.

NVIDIA Corp NVDA has announced that it is postponing the release of its highly anticipated AI chip, the Blackwell B200, due to a design flaw discovered late in the production process.

This delay will push back production by at least three months, which is unusual for a company known for its cutting-edge technology and quick release schedules.

The Blackwell B200 is set to succeed Nvidia's H100 chips, which have been crucial for AI cloud infrastructures worldwide.

These chips have not only strengthened Nvidia's reputation as a technology leader but also significantly boosted its valuation, making it one of the most valuable companies globally.

The success of the H100 has created high expectations for the B200, which is expected to further enhance AI capabilities.

This delay is particularly significant given the large orders from major cloud service providers like Microsoft, Google, and Meta, which have already invested tens of billions of dollars in B200 chips.

These orders highlight the importance of these chips for AI technologies, meaning the delay is a setback not just for Nvidia, but for the progress of AI services worldwide.

Despite this challenge, Nvidia remains optimistic about its production plans and intends to increase output in the second half of the year. However, large-scale shipments are not expected until the first quarter of next year.

This change might affect Nvidia's goal of releasing new AI chips annually, which is vital for keeping up with rapid advancements in AI technology and competing with rivals like AMD, which is also quickly developing its own AI chips.

Nvidia is dealing with challenges due to recent stock market volatility. After hitting a record high of $140 in June 2024, Nvidia's stock dropped sharply, falling 35% by August to a low of $90.

This has become a strong support level, preventing further declines, with the next key support at the daily 200 simple moving average around $80.

Despite these setbacks, the stock has still seen impressive year-to-date growth of 102%. This resilience highlights Nvidia's strong fundamentals and the confidence investors have in its market position and recovery potential.

With earnings announcements coming up, investors are optimistic about a repeat of previous positive results that led to a 9% increase in stock value.

As Nvidia weathers these challenges, the stock has bounced back above $100, a significant psychological level that could offer more support.

Looking ahead, a market recovery could push the stock to surpass its previous peak, but it would need to rise 41% to set a new record high.

After the closing bell on Monday, August 6 the stock closed at $100.45, trading down by 6.36%.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.