Nvidia, the chip supplier, mainly to the AI sector confirmed in September 2024 that its new Blackwell chip had faced some production problems, affecting Nvidia’s shares which fell by 8.4 per cent. It happens to a company that has shown spectacular growth in past. And its growth forecast too beats expectations. This justifies the adage in Silicon Valley that hardware is hard.

The Blackwell delay is a temporary hitch. The overall margins are enormous. The surging demand for its chips will continue for many more quarters. That Blackwell is a little late is not an issue. The existing products sell like hot potatoes. The production issue is sorted. It was an issue related to operations rather than the chip design. It was not an issue where the product will be back-to-the-drawing-board type. The company has streamlined its operations. It pledges to update its flagship hardware at least once a year. They hope to have a great next year.

Investors should better be concerned about the biggest buyers of Nvidia chips making their own components. They contribute 45 per cent to Nvidia’s revenues.

The issues may not become obvious in a couple years. Even if AI is overhyped, it will be detected after many more billions being spent on Nvidia chips. Till then, there is no cause for investors to overreact.

Of course, hardware is hard. Keeping Wall Street happy is even harder.