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Nvidia's Next-Generation AI Blackwell Chips Face Server Overheating Issues

2024-11-18

Nvidia, a leading name in the tech industry, has been making waves with its next-generation artificial intelligence (AI) Blackwell chips. However, recent reports have brought to light some challenges associated with these chips. According to The Information and a Reuters report digesting its coverage, when connected in server racks designed to hold up to 72 chips, Nvidia's Blackwell graphics processing units overheat. This has led to concerns among some customers who worry about having enough time to get new data centers up and running.

Engineering Iterations: A Normal Part of the Process

An Nvidia spokesperson stated in a statement to Investopedia that "NVIDIA GB200 systems are the most advanced computers ever created. Integrating them into a diverse range of data center environments requires co-engineering with our customers." The spokesperson added that "while our customers race to be first to market, NVIDIA is working with leading CSPs (cloud service providers) as an integral part of our engineering team and process. The engineering iterations are normal and expected." This shows that Nvidia is actively addressing the overheating issue through continuous engineering improvements.

CEO's Perspective on the Blackwell Chip

Nvidia Chief Executive Officer (CEO) Jensen Huang has called the Blackwell chip "a complete game changer for the industry." The company has said it expects to ship several billion dollars worth of Blackwell revenue during the January quarter as production ramps up. This indicates the significant potential and importance of the Blackwell chip in Nvidia's future.

Impact on Nvidia's Share Price

Nvidia shares fell as much as 1.8% on Monday morning, despite the company's efforts to address the overheating issue. However, it's important to note that Nvidia's stock has almost tripled this year, highlighting the overall positive sentiment towards the company. This shows that while the current challenges are significant, they do not overshadow the long-term prospects of Nvidia.

Supplier's Role in Resolving the Issue

The chipmaker has asked its suppliers to change the design of the racks several times to resolve the overheating problems. This shows that Nvidia is working closely with its suppliers to find a sustainable solution. By collaborating with suppliers, Nvidia is able to leverage their expertise and resources to address the issue more effectively.

In This Story, Tesla (TSLA + 6.83%) stock witnessed a remarkable uptick early on Monday. It is reported that President-elect Donald Trump's team is set to grant a significant victory to key ally Elon Musk. This development has sparked considerable interest among investors and industry observers.

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Bloomberg News reveals that members of Trump's transition team have expressed their intention to make a federal framework for fully autonomous vehicles a top priority for the incoming Department of Transportation. Currently, federal rules pose challenges for deploying vehicles like Tesla's advertised Cybercab, which lack steering wheels and pedals.This could prove to be a major advantage for Musk. He has consistently emphasized Trump's election win as a victory for the US and his own companies. In October, during an earnings call, he stated that national approval is crucial. He even proposed the creation of a Department of Government Efficiency (DOGE) to push for a national approach to regulating driverless vehicles.Although the federal government has previously explored national regulations for autonomous vehicles, guidance and standards issued by federal regulators have been limited. Currently, 19 states have laws allowing driverless vehicles to operate on public roads. Musk expects Tesla to obtain approval to launch rideshare services in California, Texas, and "some other states" in 2025, along with approval for a "fully autonomous" version of the company's driver-assist software. He believes that Tesla will likely succeed in California, where rivals like Google's Waymo and Amazon's Zoox have operations.Bloomberg reports that bipartisan legislation is being considered to establish federal rules for autonomous vehicles. Without legislation, the Transportation Department would need to issue rules through the National Highway Traffic Safety Administration to facilitate deployment. The agency currently permits companies to deploy up to 2,500 self-driving vehicles annually.Tesla stock surged nearly 6% in pre-market trading on Monday. Year-to-date, the shares have gained 29%, largely driven by a stock rally following Trump's election victory.Musk wields significant influence over the president-elect, although the extent of his influence remains unclear. Since Trump's victory, Musk has attended many meetings and meals, including those with foreign leaders and ambassadors. He has also requested that SpaceX employees be appointed as top government officials, including at the Department of Defense.Last week, Trump appointed Musk and former presidential candidate Vivek Ramaswamy to lead DOGE, an outside-of-government group aiming to cut approximately $2 trillion from the budget, which is about one-third of all federal spending.Musk is expected to play a crucial role in guiding the Trump administration's artificial intelligence initiatives, which will benefit X (META + 0.63%), Tesla, and xAI. He will also participate in discussions regarding tariffs on Chinese products. Trump's team plans to eliminate the $7,500 tax credit for electric vehicle purchases, which has benefited both Tesla and its rivals. However, Musk believes that Tesla will be less affected compared to other companies.Musk's SpaceX could also benefit from Trump's presidency. The CEO has expressed the need to change regulations to eliminate the need for companies to repeatedly obtain permits to launch rockets.Over the weekend, Trump appointed Musk's ally and Commissioner Brendan Carr to lead the Federal Communications Commission, which is likely to provide a boost to SpaceX's Starlink subsidiary.

Super Micro Computer has been in the spotlight recently as its shares showed significant movements. In early trading on Monday, the shares rose, continuing their rally on the expectation that the tech company is preparing to submit a plan to avoid being delisted from the Nasdaq. This comes after a series of events and challenges faced by the company.

Super Micro's Journey to Stay Listed Amidst Challenges

Gains After Initial Setbacks

Super Micro Computer's shares initially took a hit in recent months due to concerns about potential delisting. The company delayed filing its annual report in August, which led to a decline in its stock value. However, there is now hope as it is on track to submit a plan by Monday to meet the deadline set by the Nasdaq. This turnaround has sparked a rally in its shares, with them climbing more than 18% after the market opened on Monday. Despite this increase, they are still down more than 80% from their highs in March.

The company's efforts to address these issues are crucial for its future. By submitting a plan to avoid delisting, Super Micro Computer aims to regain the trust of investors and stakeholders. This shows its determination to overcome the challenges and continue operating in the market.

Impact of Accounting Allegations

The situation was further complicated by accusations of "accounting manipulation" from short seller Hindenburg Research. This led to the resignation of accounting firm EY and speculation about the company's accounting practices. However, Super Micro Computer has been working to address these concerns and has stated that it "remains unable at this time to predict" when it will file the delayed annual report.

The company's transparency in addressing these issues is important. It shows that they are taking the allegations seriously and are working towards resolving them. By providing updates and explanations, Super Micro Computer is trying to restore confidence in its operations.

Barron's Report and Deadline

According to Barron's, which cited a person familiar with the matter, the server manufacturer expects to be able to meet the deadline set by the Nasdaq. This indicates that the company is making progress in its efforts to avoid delisting. The report provides some clarity and reassurance to investors, who have been closely watching the situation.

The deadline is a significant milestone for Super Micro Computer. Meeting it will not only help the company avoid delisting but also demonstrate its ability to manage and resolve issues in a timely manner. It is a crucial step in its recovery process.