NVIDIA's 'Blackwell' Q4 Expected Billions in Sales Despite 6% Drop in After-Hours (Comprehensive)

Blackwell Defect Acknowledged... "Shipment Scheduled for Q4"
Details Withheld... Stock Price Drops During Conference Call
Bloomberg Interview Emphasizes "Blackwell Is a Major Leap"

Jensen Huang, CEO of NVIDIA, forecasted that the supply of artificial intelligence (AI) chips will improve each quarter but acknowledged production defects in the next-generation AI chip 'Blackwell.' Despite expectations that Blackwell would generate billions of dollars in revenue in the fourth quarter of fiscal year 2025, the company failed to provide specific forecasts beyond this, causing the stock price to fall more than 6% in after-hours trading despite strong earnings.

On the 28th at 8 p.m. (local time) during after-hours trading on the New York Stock Exchange, NVIDIA was trading at $116.92, down 6.92% from the previous day. NVIDIA's stock price had plunged as much as 8.4% following the earnings announcement.

Jensen Huang, CEO of NVIDIA
Photo by Yonhap News

That day, NVIDIA announced its fiscal year 2025 second-quarter results (May to July) after the New York Stock Exchange closed. Revenue reached $30.04 billion, and net income was $16.6 billion, soaring 122% and 168% respectively compared to the same period last year. The second-quarter earnings per share (EPS) were $0.68. For the third quarter (August to October), the company issued guidance expecting revenue to reach $32.5 billion, surpassing analysts' estimates of $31.77 billion.

Thanks to strong demand in the data center segment, NVIDIA reported results exceeding market expectations. However, concerns about the next-generation AI chip 'Blackwell,' which will be key to the second half of this year's performance, led to a decline in the stock price.

The Blackwell B200 chip, unveiled by NVIDIA at its annual developer conference last March, boasts performance far exceeding the current latest NVIDIA AI chip, the Hopper H100. Microsoft (MS), Google, Meta, and others are reported to have already placed orders worth tens of billions of dollars. Blackwell was originally scheduled for release within this year. However, according to foreign media reports, defects were discovered during production, and NVIDIA notified MS and another customer earlier this month of delays in Blackwell production. According to The Information, NVIDIA does not plan to ship Blackwell at scale until the first quarter of next year.

During the conference call, NVIDIA acknowledged these concerns, stating that changes in the mask production stage are necessary to improve Blackwell's yield. They added that these changes would bring in billions of dollars in revenue. CEO Huang emphasized, "Demand for both Blackwell and Hopper is tremendous," and said, "We will not start production of Blackwell in the fourth quarter, but we will ship it in the fourth quarter."

CFO Colette Kress said that Blackwell production would begin to increase in the fourth quarter and continue through fiscal year 2026. She also stated that revenue from Blackwell would be added alongside continued growth of the existing Hopper chips. However, when asked whether the billions of dollars in Blackwell revenue expected in the fourth quarter would be incremental revenue, she did not provide an answer.

Additionally, CEO Huang said, "Companies investing in NVIDIA infrastructure are seeing immediate returns," adding, "Our GPUs efficiently process data, reducing customer costs. In the future, every data center will be equipped with GPUs." This statement is interpreted as a response to concerns raised by some who argue that despite massive investments in generative AI, profits have not materialized, fueling 'AI bubble' theories.

However, the market had expected more detailed information about the Blackwell product launch. NVIDIA executives remained silent on details other than the statement that Blackwell would generate billions of dollars in revenue in the fourth quarter, causing the stock price to plunge during the conference call.

In an exclusive interview with Bloomberg TV that followed, CEO Huang sought to reassure investors. He said, "There will be billions of dollars in revenue in the fourth quarter, increasing in the first and second quarters of next year," and added, "Next year will also be a great year."

He also stated, "Supply is improving, and our supply chain is one of the largest in the world," adding, "We expect supply in the third quarter to be higher than in the second quarter, and supply in the fourth quarter to be higher than in the third quarter. I believe supply conditions next year will improve significantly compared to this year." Earlier, in a conference call in May, CEO Huang had said that supply would not keep up with demand until next year.

He forecasted that demand would continue to increase as supply grows. CEO Huang emphasized, "Blackwell represents a really big leap in demand," citing, "For example, just looking at foundation model creators, the size of foundation models continues to grow." He continued, "The generative AI market has also become very diverse. Not only internet service providers but startups, enterprises, and even countries are entering, causing demand to grow significantly."