On May 21, Amazon’s cloud computing division AWS announced it has paused orders for Nvidia’s advanced “superchip” Grace Hopper, opting to wait for the more powerful Grace Blackwell (GH200). This decision comes as investors worry about a potential dip in demand during the transition between these two product cycles.
In March, Nvidia introduced its next-generation processor, Blackwell, just under a year after starting shipments of its predecessor, Hopper. Nvidia CEO Jensen Huang highlighted that the new product will double the capabilities for training large language models.
Grace Hopper was officially launched in August this year. AWS confirmed the decision, stating that the short time gap between the two products justifies waiting for the new one.
Due to regulatory quiet periods, Nvidia declined to comment before releasing its quarterly earnings report on Wednesday. Following the news, Nvidia’s stock fell by about 1% in early trading on Tuesday.
Analysts predict that Nvidia’s sales will double this quarter, driven by significant investments in AI technology from major tech companies. However, some investors are questioning the sustainability of this rapid growth.
Morgan Stanley analysts reported that while tech giants are committing to continued investments in AI infrastructure, there is market anxiety regarding Nvidia’s brief pause before Blackwell’s release.
The production of Blackwell chips is expected to increase gradually this year, with deliveries anticipated in the fourth quarter. Citigroup analysts forecast a demand gap for Nvidia’s AI chips during this period.
Neither Amazon nor Nvidia disclosed the order values. HSBC analysts estimate a GB200 chip could cost up to $70,000, with entire servers featuring this technology reaching up to $3 million.
AWS will continue to offer other Nvidia chips, including the H100, to its cloud customers. However, as one of Nvidia’s largest clients, AWS’s decision might concern investors, who already feared delays in tech purchases as they await Blackwell’s launch.
For most of last year, Nvidia’s H100 AI chips were in high demand due to the rise of AI infrastructure investments following the launch of OpenAI’s ChatGPT. However, since early 2024, the wait time for H100 chips has eased.
Nvidia’s stock has nearly doubled since the beginning of the year, driven by confidence in AI chip demand. Nonetheless, since the Blackwell announcement in March, the stock has struggled to maintain a consistent upward trend.
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