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Nvidia Faces Setbacks as Major Customers Delay Orders of Latest AI Racks Due to Overheating Issues

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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.

 

SoftBank to Receive Nvidia’s Latest Blackwell Chips for AI Supercomputer

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SoftBank’s telecommunications unit in Japan will be the first to acquire Nvidia’s latest Blackwell-designed chips, marking a key step in the company’s ambition to harness artificial intelligence capabilities. The California-based chip giant made the announcement at a recent AI event in Tokyo, featuring both SoftBank Group CEO Masayoshi Son and Nvidia CEO Jensen Huang. SoftBank also plans to incorporate the Blackwell architecture in its upcoming supercomputer, as Son strengthens his group’s investment in AI through strategic acquisitions, including a stake in OpenAI and the purchase of chip startup Graphcore.

During a lively “fireside chat,” Huang recalled an instance when Son, already a visionary in AI, once proposed lending him the funds to buy Nvidia, a company the market undervalued at the time. “He wanted to lend me money to buy Nvidia—all of it. Now I regret not taking it,” Huang said, smiling. Son had made the offer shortly after acquiring Arm, a chip designer he later attempted to sell to Nvidia, though regulatory issues prevented the merger.

Over the years, Nvidia has transitioned from a primary focus on gaming graphics chips to becoming the global leader in AI chip technology, now powering much of the AI revolution. While Son has earned recognition as an early-stage investor in tech, with notable stakes in Alibaba and other successes, he has also faced setbacks, such as his high-profile investment in WeWork.

With telecom firms worldwide exploring new growth avenues, SoftBank and Nvidia are collaborating on a network to support both AI and 5G services, aligning their visions for the future. “It’s the same vision that we can smell, right? It’s like a wolf smell wolf,” Son joked about their shared outlook. Huang responded with humor, “I have two puppies. I don’t like that mental image,” drawing laughter from the audience.