On July 5, the semiconductor and artificial intelligence (AI) analysis company SemiAnalysis issued a statement suggesting that Nvidia (NASDAQ: NVDA) could be facing a more than one-year delay in an important product launch.
The chipmaker was quick to respond, and the stock price has climbed since CEO Jensen Huang’s company issued a statement that pushed back against those claims.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
Nvidia’s response to the Kyber delay claim
The reporting suggested Nvidia’s Kyber rack architecture, which is designed to pack 144 of the company’s GPUs into a single server so that they can work as one powerful system, was experiencing delays that would push its launch out to 2028.
Nvidia responded, telling Yahoo! Finance that the roadmap for Kyber was still “intact,” which would put its launch window in the second half of 2027. The market appeared to absorb the initial news without any major fallout for the stock price. Shares of Nvidia opened at $194.42 on July 6 and closed at $210.96 on July 10. The chipmaker maintains its position as the world’s most valuable publicly traded company by market cap.
During the period when the talk of a potential Kyber delay was circulating, however, another surprise was unfolding.
The challenges of being successful
Nvidia has been the face of the AI trade; as of this writing, the stock price is up more than 900% over the past five years. But even as the chipmaker keeps beating expectations in its quarterly earnings reports, the bar has been set so high from its previous successes that it’s becoming increasingly difficult for it to impress the markets.
Nvidia recently traded at a forward price-to-earnings (P/E) ratio of 22.2; the last time its forward P/E was around that level was in June 2019.
At first glance, that seems like a disconnect. Unlike in 2019, there is now an active race to win AI, with companies spending hundreds of billions of dollars each year on AI infrastructure.
Nvidia is generating more revenue than it ever has before, and demand for its wares is not slowing down. Yet its future earnings are still being valued at roughly the same level on a medium-term basis as they were in 2019. There is, however, a valid reason why the markets are becoming less bullish on Nvidia.
