In a surprising turn of events, Nvidia’s wait time for its highly sought-after H100 80GB GPU used in AI applications has significantly reduced from 8-11 months to just 3-4 months. This positive development suggests improved production capacity and faster order fulfillment for the technology giant. However, as lead times approach zero, Nvidia may face challenges in sustaining its revenue growth.
Previously, limited supply due to production constraints had resulted in long lead times for Nvidia’s GPUs. Now, the reduction in lead times indicates that Nvidia’s production partner TSMC and its chip-packaging subcontractors are expanding their CoWoS packaging production capacity. This expansion allows for increased supply and quicker order fulfillment, potentially resulting in short-term revenue and earnings boosts for Nvidia.
While this development seems positive, there is also a downside to the reduced lead times. As lead times become shorter, Nvidia will shift from shipping against backlogs and existing orders to solely new orders. This transition could result in a decline in revenue, as the backlog of orders that contributed to previous growth diminishes.
Additionally, geopolitical factors play a role in Nvidia’s growth prospects. U.S. restrictions prevent Nvidia from shipping fully-enabled H100 GPUs to China, causing lower demand in the market. However, this limitation might also mean that Nvidia has excess H100 silicon that it can redirect to other regions, facilitating the reduction in lead times.
Analysts anticipate continued growth for Nvidia in the market, with no expected quarter-on-quarter drops in revenue until January 2026. However, the rapid decrease in lead times raises concerns that this growth may cool off sooner than expected, possibly within the next two or three quarters. It is worth noting that the stock’s current valuation assumes uninterrupted growth, which may not align with the potential slowdown.
Despite these uncertainties, the AI industry as a whole is expected to continue expanding. Nvidia’s shipments contribute to the growing install base of GPUs, and competitors will also contribute to this growth. While Nvidia’s sequential growth may face challenges, the broader AI industry will persistently advance.
Frequently Asked Questions (FAQ) – Nvidia’s Reduction in Lead Times for H100 80GB GPUs
Q: What was the previous wait time for Nvidia’s H100 80GB GPU?
A: The previous wait time for Nvidia’s H100 80GB GPU used in AI applications was 8-11 months.
Q: How much has the wait time been reduced to?
A: The wait time for Nvidia’s H100 80GB GPU has significantly reduced to just 3-4 months.
Q: What does the reduction in lead times suggest?
A: The reduction in lead times suggests improved production capacity and faster order fulfillment for Nvidia.
Q: Why is the reduction in lead times positive for Nvidia?
A: The reduction in lead times allows for increased supply and quicker order fulfillment, potentially resulting in short-term revenue and earnings boosts for Nvidia.
Q: Are there any challenges for Nvidia with shorter lead times?
A: Yes, as lead times become shorter, Nvidia may face challenges in sustaining its revenue growth, particularly as it transitions from shipping against backlogs to solely new orders.
Q: What factors have contributed to the reduction in lead times?
A: Nvidia’s production partner TSMC and its chip-packaging subcontractors have expanded their CoWoS packaging production capacity, allowing for increased supply and quicker order fulfillment.
Q: How do geopolitical factors impact Nvidia’s growth prospects?
A: U.S. restrictions prevent Nvidia from shipping fully-enabled H100 GPUs to China, resulting in lower demand in the market. However, this limitation may allow Nvidia to redirect excess H100 silicon to other regions, facilitating the reduction in lead times.
Q: What is the outlook for Nvidia’s growth in the market?
A: Analysts anticipate continued growth for Nvidia, with no expected quarter-on-quarter drops in revenue until January 2026.
Q: What is the concern regarding the rapid decrease in lead times?
A: The rapid decrease in lead times raises concerns that Nvidia’s growth may cool off sooner than expected, possibly within the next two or three quarters.
Q: Does the broader AI industry continue to expand?
A: Yes, despite the uncertainties surrounding Nvidia’s sequential growth, the broader AI industry is expected to continue expanding with contributions from Nvidia and other competitors.
—
Key Terms and Jargon Definitions:
– GPU: Graphics Processing Unit. It is a specialized electronic circuit that accelerates the creation and rendering of images, videos, and animations.
– AI: Artificial Intelligence. It refers to the simulation of human intelligence in machines, enabling them to perform tasks that typically require human intelligence, such as visual perception, speech recognition, and decision-making.
—
Related Links:
– Nvidia Official Website
The source of the article is from the blog toumai.es