Investing.com -- Nvidia's stock dropped over 4% on Monday following a report from The Information about delays experienced by some of its major customers in deploying its advanced Blackwell AI chips in data centers.
The delays stem from issues with the initial shipments of Nvidia (NASDAQ:NVDA)'s Blackwell-equipped racks, according to The Information.
The publication explains that these racks have faced overheating problems and glitches in chip connectivity.
The technical setbacks are said to have affected major customers, including Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN) Web Services, Google (NASDAQ:GOOGL), and Meta Platforms (NASDAQ:META), prompting them to cut back on some orders of the Blackwell GB200 racks.
In particular, Microsoft, which had planned to install a substantial number of these racks in its Phoenix data center, reportedly shifted to using an older generation of Nvidia chips, the H200, due to the delays.
The Information noted that this adjustment significantly reduced the number of Blackwell chips deployed in the facility.
Despite the reported issues, Nvidia remains optimistic about the potential of its Blackwell chips. The company had projected significant revenue from the Blackwell series, expecting several billion dollars in revenue in the January quarter alone.
The chips are touted as being four times more energy efficient than their predecessor, Hopper, which is crucial for data centers with fixed energy capacities.
However, the delays are said to be causing strain not only on Nvidia but also on its cloud provider customers and AI developers who rely heavily on Nvidia's chips for their supercomputing clusters.
The Information reported that if Nvidia and its suppliers can resolve the issues, customers may reconsider and increase their orders.