Nvidia’s Bold Move: Are Investors Ready for Blackwell?

Nvidia (NASDAQ: NVDA) is on the brink of a major launch that could define its future. The company is preparing to unveil its new Blackwell architecture, a development that promises to introduce several innovative features that may reshape the industry. Production of the Blackwell chip is expected to ramp up in the fourth quarter.

This moment is critical for Nvidia. The firm has built an impressive presence in the AI market, posting triple-digit revenue growth quarter after quarter. However, as revenue reaches extraordinary levels, maintaining these gains may prove challenging, especially with competitors entering the market. This leads us to an important question: What will Nvidia’s position be six months following the Blackwell launch? Examining the past can offer some insight.

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Anticipations for the Blackwell Launch

To better understand Nvidia’s current path and what lies ahead with Blackwell, let’s recap its journey. Nvidia has solidified its dominance in the AI sector by creating powerful chips and a comprehensive suite of products and services. Businesses have the option to purchase Nvidia’s renowned graphics processing units (GPUs) or invest in its complete data center solutions.

As a result, Nvidia recently reported record quarterly revenue of $30 billion and gross margins consistently above 70%. Additionally, net income surged past $16 billion last quarter, reflecting robust financial health.

Investors are keenly awaiting the Blackwell launch, encouraged by the architecture’s significant innovations — featuring Nvidia’s best chip to date, an advanced maintenance system to enhance uptime, and a fifth-generation NVLink for high-speed communication among up to 576 GPUs. CEO Jensen Huang has indicated that demand for this new product is exceeding supply, a trend he anticipates will continue into next year. In a recent CNBC interview, he described demand as “insane.”

Insights into Nvidia’s Profitability

Given the anticipated success of Blackwell, Nvidia forecasts billions in revenue for the fourth quarter. This launch is set to make a substantial impact on Nvidia’s overall earnings. The company has also projected gross margins in the mid-70% range for the entire year, suggesting it can successfully introduce a major product while upholding strong profitability.

Looking ahead, we can draw from past performance. For instance, in the six months after the Hopper architecture was released in 2022, Nvidia’s stock surged nearly 100%. Data from Nvidia’s earnings report for the period ending April 30, 2023, indicates explosive demand for their platform and nearby products, leading to record data center revenue, reaffirming optimism for Blackwell’s future.

Furthermore, as Nvidia refines its production processes for Blackwell and overcomes initial launch costs, an increase in profit margins may follow. If this occurs, the already high gross margins will only improve, benefitting long-term growth.

Nvidia’s Key Customers Are Well-Resourced

While Nvidia does not disclose revenue percentages from specific customers, analysts reveal that significant clients include Microsoft, Meta Platforms, Amazon, and Alphabet. This is a positive sign, as these companies possess ample resources to boost their AI investments as demand continues to rise.

Recent comments highlight just how eager these giants are to secure Nvidia products. For example, Oracle co-founder Larry Ellison and Tesla CEO Elon Musk shared that they “begged” Nvidia for more chips, demonstrating that even with competition, industry leaders prioritize Nvidia.

It is important to recognize that while Nvidia might not achieve triple-digit growth in all future quarters, a slowdown in growth may be misunderstood. Significant revenue has already pushed figures to striking heights, making further rapid growth more challenging. Thus, a deceleration should not be perceived negatively.

In conclusion, six months post-Blackwell’s launch, Nvidia could very well be striving to meet high demand while reporting significant revenue and solid earnings growth, leading to potentially strong stock performance. Even if its shares do not increase at the astronomical rates seen after the Hopper launch, Nvidia is strategically positioned for long-term success.

Is Investing in Nvidia the Right Move?

Before making any investment in Nvidia, it’s essential to consider the following:

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon, Oracle, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, Oracle, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.