Nvidia's current success is anchored on the high demand for its powerful AI chips, but production issues in its newest generation have spooked some investors.
The's Spectrum-X platform, a cost-effective networking solution for data centers, is taking off and boosting sales.
The company is expanding beyond AI chips, rolling out new software for custom AI solutions, and advancing into the automotive industry with AI integrations.
The roller coaster doesn't seem to be stopping as Nvidia (NVDA -4.69%) The centerpiece of the artificial intelligence (AI) boom has also been the main driver of the S&P 500 index's performance since late 2022. This year alone, roughly a quarter of the index's 20% rise can be attributed to the chipmaker.
That's a lot of weight on Nvidia's shoulders. Investors are hyperfocused on its every move, seeing it as a bellwether for the market at large. The good news for investors, then, is that the AI giant is charging full steam ahead. It will face challenges and overcome obstacles, but Nvidia has several catalysts that could boost its bottom line in the not-too-distant future. What will the next year bring for Nvidia?
Demand is still extremely high for its bread and butter
The uber-powerful chips the company designs and sells are the backbone of its success. That's why investors were spooked when the company announced its first real snafu since the AI boom took off. Production issues were discovered in the newest version of its AI chips originally set to begin rolling out in the third quarter. These chips, dubbed Blackwell, are now expected to hit the market a quarter later in Q4. Luckily, this delay is shorter than some feared, and the company assured investors that the delay had been accounted for in its guidance.
Critically, any loss from Blackwell chips in the short term is being compensated for by the still extremely high demand for its current-generation Hopper chips. When Blackwell does begin rolling out, the company expects the demand to be even stronger. As CEO Jensen Huang put it, "The anticipation for Blackwell is incredible."
Now, while Nvidia has generally delivered on its promises in the past, it's a good idea to take a company's promises with a grain of salt. Company brass was a little light on details around the delay, and there is always a chance that things won't go as planned. If more delays are announced, it could spell trouble for Nvidia. Still, I don't see any reason to believe that will happen here or that this will develop into a major problem.
Nvidia makes more than its flagship chips
Nvidia's data center segment, under which its AI chips fall, is by far its most lucrative. I think the chart below puts into perspective just how important the segment is for the company.