Nvidia is encountering challenges with its new ‘Blackwell’ AI racks, with major customers delaying their orders due to overheating issues, as reported by The Information on Monday. Shares of the Santa Clara-based company dropped more than 4% following the news.
The overheating problems reportedly affect the initial shipments of the racks, which house Nvidia’s chips in data centers. The glitches include issues with how the chips are connecting to each other. This problem has led major customers such as Microsoft, Amazon’s cloud division, Alphabet’s Google, and Meta Platforms to reduce their orders for the new racks.
Delayed Orders and Shift to Older Models
The affected customers, often referred to as hyperscalers, had placed substantial orders for the Blackwell racks, with each company initially committing $10 billion or more. Some are opting to delay their orders until a later version of the racks is available, while others are returning to older AI chip models.
Microsoft, for instance, had planned to deploy at least 50,000 Blackwell chips in a Phoenix facility, but due to the delays, OpenAI, one of its key partners, requested that Microsoft provide older ‘Hopper’ chips instead.
Despite these delays, it remains unclear how much this will impact Nvidia’s overall sales, as the company may still find other buyers for the affected racks. In November, Nvidia’s CEO Jensen Huang had expressed confidence that the company would exceed its target of generating billions of dollars in revenue from Blackwell chips during its fourth fiscal quarter.
Nvidia and Amazon declined to comment, while Microsoft, Google, and Meta did not immediately respond to Reuters’ inquiries.