By Stephen Nellis and Aditya Soni
SAN FRANCISCO/BENGALURU (Reuters) – Nvidia’s revenue forecast disappointed Wall Street on Wednesday, raising questions about whether the artificial intelligence boom is waning. But the answer, according to Nvidia executives, analysts and investors, is a resounding no.
There’s no shortage of companies eager to create new AI systems using Nvidia’s superior chips, and the world’s largest publicly traded company is selling them as fast as chipmaker Taiwan Semiconductor Manufacturing Co can make them.
Nvidia on Wednesday forecast its slowest revenue growth in seven quarters, sending its shares down 2.5% after-hours, and said supply chain constraints would cause demand for its chips to exceed several quarters in fiscal 2026 the offer.
Making these chips is difficult, and a flaw discovered in one last summer doesn’t help.
Nvidia’s new flagship chip, called Blackwell, is actually multiple chips that must be glued together in a complex process the chip industry calls advanced packaging. As TSMC races to expand capacity, packaging remains a sticking point for Nvidia and other chip companies.
“Blackwell is adding more advanced packaging from TSMC than previous chips, which adds a wrinkle,” said Ben Bajarin, CEO and principal analyst at research firm Creative Strategies. He expects that Nvidia will have more demand than it can supply throughout 2025.
Nvidia’s missteps have exacerbated the problems.
The Blackwell design flaw forced Nvidia to make what it calls a “mask change.” CEO Jensen Huang said the error, which has since been fixed, reduced Blackwell’s chip yields, which is the proportion of chips that come off the production line fully functional.
Although Nvidia never addressed the error, complex chips like Blackwell can take months to produce because they require hundreds of production steps. Many of these steps involve shining ultraviolet light through a series of complex masks to project the image of a chip’s circuitry onto a silicon disk – a process similar to printing the chip.
The mask change appears to have delayed Nvidia’s production timelines and cost money, analysts said.
“There is a risk that the bottlenecks could worsen rather than improve, and that could hurt revenue forecasts,” said Michael Schulman, chief investment officer at Running Point Capital.
On a conference call with investors, Nvidia executives said the company has shipped about 13,000 samples of its new chip and expects it to exceed initial estimates that it would sell several billion dollars this quarter.
