Nvidia announces higher sales forecast for next-generation Blackwell chips.

• The rollout of Nvidia's next generation Blackwell chip is on schedule, the company announced on Wednesday.
• Nvidia's production of chips and systems will limit Blackwell's sales in the upcoming quarters, not the demand for its products.
• "Huang stated that Blackwell production is running smoothly and that the company will exceed its previous estimates in terms of the number of Blackwells delivered this quarter."

Now that the chipmaker has a $140 billion annual revenue run rate, investors and analysts are questioning how long it can sustain this level of growth, which nearly doubled sales in the previous quarter.

Nvidia's next-generation AI chip, known as Blackwell, is the source of those hopes.

On a call with analysts on Wednesday, CEO Jensen Huang and CFO Colette Kress shared new data points on the progress of Blackwell's launch. The duo highlighted that the rollout is proceeding as planned and indicated that Blackwell sales in the next few quarters will be constrained by the number of chips and systems Nvidia can produce, not the amount it can sell.

"Huang stated that Blackwell production is running smoothly and that the company will exceed its previous estimates in terms of the number of Blackwells delivered this quarter."

Despite missing elevated expectations from bullish investors, Nvidia's stock is only down 1% due to the company's positive comments on Blackwell.

Nvidia's ongoing engineering changes to its systems to address problems have sparked fears about shipment delays, as addressed by Huang and Kress in their comments.

Nvidia has already shipped 13,000 Blackwell chips to customers, including Microsoft, Oracle, and OpenAI, as confirmed on Wednesday.

"Huang stated that although there is still a lot of engineering work to be done, Blackwell is in excellent condition as evidenced by the systems being set up."

The sample chips are not the main shipments that the company is anticipating. They are early versions meant for customers to test and prepare for the volume shipments that will begin in Nvidia's current quarter.

Huang stated that we will ship more Blackwells in the next quarter than the current one, and we will ship even more in the quarter following that than our initial quarter.

In July, Nvidia predicted it would earn "several billion dollars" in Blackwell revenue in the current quarter. On Wednesday, the company announced that it expects Blackwell sales for this quarter to be higher than its initial forecast. Additionally, CEO Jensen Huang stated that Microsoft plans to soon preview its Blackwell-based systems to cloud customers.

The production of more Blackwell systems is constrained by the availability of components from Nvidia's suppliers, according to Huang. Furthermore, it takes time to increase the speed of a manufacturing process that has transitioned from zero to billions of dollars in shipments in a short period.

Huang stated that our supply is currently exceeded by demand, which is expected as we are in the early stages of the generative AI revolution.

He mentioned some of Nvidia's "excellent collaborators," including , , , and .

"Nearly every enterprise globally appears to be linked to our supply chain," Huang remarked.

Nvidia announced that Blackwell's gross margins will be lower than the 73.5% reported in the third quarter in the upcoming months. However, the company stated that the margin will increase as the product matures. Huang mentioned that Blackwell can be purchased as a standalone chip or as part of a complete rack and other components.

Nvidia announced on Wednesday that its new Blackwell chip is in high demand due to the need for the fastest GPUs among companies like OpenAI for developing next-generation AI models. As Blackwell is released, Nvidia's current AI chips, known as Hopper, will be used for serving AI models rather than creating new ones. Nvidia expects Blackwell sales to eventually surpass those of Hopper.

"Huang stated that the current generation of foundation models has around 100,000 Hoppers, and the next generation will begin with 100,000 Blackwells."

Despite Amazon and Microsoft entering the market, Nvidia can still experience growth, according to Susquehanna's Chris Rolland.