Nvidia continues its dominance in the AI chip market, reporting a staggering $35.1 billion in revenue for Q3, representing a 94% year-over-year increase. The Santa Clara-based chip giant has grown more than 200% this year to become the world’s most valuable company, but all eyes are now on Blackwell, its next-generation AI GPU that could make or break the company’s momentum.
CEO Jensen Huang first unveiled Blackwell at the company’s GTC conference in March as the successor to the highly successful Hopper GPU, which has powered AI model development across Silicon Valley. While Nvidia confirmed that Blackwell is now “in full production” with 13,000 samples shipped to customers last quarter, the path to scaling production presents significant challenges.
CFO Colette Kress described Blackwell as a “full-stack” system with customizable configurations designed to address a diverse and growing AI market. The chip must accommodate everything from x86 to Arm architectures, training to inferencing GPUs, and InfiniBand to Ethernet switches. This complexity requires orchestrating an incredibly intricate supply chain involving partners like TSMC, SK Hynix, SPIL, Foxconn, Amphenol, Wiwynn, and Vertiv.
Performance benchmarks show promising results. Kress cited Blackwell’s debut on the MLPerf Training benchmark, where it delivered a 2.2 times performance leap over Hopper. This improvement is critical as AI companies racing to build smarter models depend on these next-generation capabilities to satisfy their own investors and stakeholders.
However, challenges remain. The Blackwell ramp-up will cause gross margins to drop by a few percentage points before recovering to the current 75% level once fully ramped. Earlier reports suggested cooling issues were affecting production, though Huang appeared to indicate these have been addressed. The company has committed to a “one-year rhythm” of new chip releases, effectively requiring annual showcases of vastly more powerful GPUs while proving it can deliver them at scale.
Hamish Low, research analyst at Enders Analysis, noted that Nvidia will dominate the AI accelerator market for the foreseeable future, especially with the expected wave of AI capital expenditure from tech firms in 2025. AMD remains “a ways behind,” giving Nvidia breathing room. Yet the challenge lies in meeting the “sheer weight of investor expectations” - anything less than continually exceeding expectations could trigger a significant market correction.
Key Quotes
should be framed and hung in the Louvre
Wedbush analyst Dan Ives used this colorful metaphor to describe Nvidia’s blowout Q3 earnings, emphasizing the historic nature of the company’s financial performance and its significance in the technology sector.
the line for Blackwell is ‘staggering,’ with the company ‘racing to scale supply to meet the incredible demand customers are placing on us’
CFO Colette Kress highlighted the enormous customer demand for Blackwell chips during the earnings call, underscoring both the opportunity and the execution challenge Nvidia faces in ramping up production.
the reality is that Nvidia will dominate the AI accelerator market for the foreseeable future
Hamish Low, research analyst at Enders Analysis, provided this assessment to Business Insider, noting that competitors like AMD remain far behind and hyperscaler chips won’t match Nvidia’s volume, giving the company significant market breathing room.
The challenge is the sheer weight of investor expectations due to the scale and premium that Nvidia has reached, where anything less than continually flying past every expectation is a disappointment
Low also warned about the double-edged sword of Nvidia’s success - the company has set such high standards that even strong performance may disappoint if it doesn’t exceed increasingly lofty expectations.
Our Take
Nvidia’s situation perfectly illustrates the paradox of market leadership in the AI era. Despite posting numbers that would be celebrated as transformational for any other company, the market’s muted response reveals a sobering truth: success breeds impossibly high expectations. The Blackwell rollout represents more than just a product launch - it’s a test of whether any company can maintain the breakneck pace of innovation that the AI revolution demands.
What’s particularly striking is the supply chain complexity Huang described. The interdependence of dozens of global partners creates both resilience and vulnerability. While diversification protects against single points of failure, it also means Nvidia’s success depends on flawless coordination across continents and industries.
The one-year chip cycle commitment may prove to be either visionary or reckless. It raises the stakes dramatically, potentially creating a treadmill from which Nvidia cannot step off without losing market confidence. If Blackwell stumbles, the entire AI infrastructure ecosystem feels the impact.
Why This Matters
This story represents a critical inflection point for the AI industry’s infrastructure backbone. Nvidia’s ability to successfully scale Blackwell production will directly impact the pace of AI innovation across the entire technology sector. With AI companies investing billions in model development, any delays or performance shortfalls in GPU availability could create bottlenecks that slow the industry’s breakneck advancement.
The one-year chip release cycle Nvidia has committed to sets a new standard for the semiconductor industry, potentially forcing competitors to accelerate their own development timelines. This could reshape competitive dynamics in the AI hardware market for years to come.
For businesses building AI applications, Blackwell’s 2.2x performance improvement over Hopper means faster model training, reduced costs, and the ability to develop more sophisticated AI systems. However, the complex supply chain dependencies highlight vulnerabilities in the AI infrastructure ecosystem. Any disruption could ripple through the entire industry, affecting everything from cloud computing costs to AI startup viability. The market’s cautious response despite stellar earnings suggests investors understand that Nvidia’s future dominance isn’t guaranteed - execution on Blackwell will determine whether the company maintains its position as the world’s most valuable company.
Recommended Reading
For those interested in learning more about artificial intelligence, machine learning, and effective AI communication, here are some excellent resources:
Recommended Reading
Related Stories
- Jensen Huang: TSMC Helped Fix Design Flaw with Nvidia’s Blackwell AI Chip
- Wall Street Asks Big Tech: Will AI Ever Make Money?
- Legendary Investor Jeremy Grantham Predicts Stock Market Crash and AI Bubble Burst by 2024
- The AI Hype Cycle: Reality Check and Future Expectations
Source: https://www.businessinsider.com/nvidia-blackwell-ai-chip-sales-earnings-jensen-huang-2024-11