NVDA stock has been facing some hardships recently due to the geopolitical tensions between the U.S. and China arousing in the light of the presidential elections. But despite all the obstacles NVDA stock has been receiving recently, the firm still has managed to bring great news to every NVDA stock investor. It was reported that Nvidia (NASDAQ: Nvidia) is increasing its orders significantly with the Taiwanese giant TSMC (NYSE: TSM). Such a move would have many super-positive implications, on the stock and on the company’s profits and revenues.
What Exactly Happened?
According to some new reports, Nvidia has finally managed to increase its orders with the accomplished chip manufacturer TSMC by 25%, as the demand for Blackwell is much higher than the company expected. This move has been very long awaited, as the only obstacle that was preventing Nvidia from earning even larger profits and expanding its revenues to gigantic heights was the supply deficit, because the continuous demand on Nvidia’s chips has been outstripping the supply capacity for quite some time now.
This is a problem Nvidia has been trying to diminish recently, and this news tackles the problem from its core. According to a report published by United Daily News, Nvidia was expected to deliver around 40,000 Blackwell units, but this figure has been upgraded to 60,000, with the GB200 NVL36 accounting for 50,000.
TSMC said that this didn’t just happen overnight, as they have been witnessing a huge demand on these chips especially from the tech giants, such as Meta (NASDAQ: META), Tesla (NASDAQ: TSLA), Google (NASDAQ: GOOG, GOOGL) and Microsoft (NASDAQ: MSFT), who have been literally racing to get their hands on the Blackwell units as much as possible, even Amazon, who’s well known for manufacturing its own chips, couldn’t avoid buying Blackwell chips in gigantic amounts.
This isn’t really a surprise, as Blackwell has already been named even before its release the ‘world’s most powerful AI chip’, as the chip features 208 billion transistors, and it’s manufactured using TSMC’s 4 nanometer processor. This architecture supports AI training and real-time large language model inference.
Impact on NVDA Stock
Nvidia’s profits are expected to increase significantly due to the rise in shipment volume for its server cabinets, the GB200 NVL72 and GB200 NVL36, from 40,000 to 60,000 units. With the high selling prices of $1.8 million for the GB200 NVL 36 and $3 million for GB200 NVL 72, these additional 20,000 units could boost Nvidia’s revenues up to a staggering $36 billion, assuming of course that all additional units are GB200 NVL36.
This increase, combined with potential economies of scale and strong market demand for high-performance computing solutions in AI and data centers, supports substantial revenue and profit growth for Nvidia. And without a doubt, this is incredible news for TSMC themselves, as the already robust demand for its 3 nanometer processors alongside the sweeping growing demand for the 4 nanometer processors, will boost TSMC’s revenues alongside Nvidia.
TSMC’s former Chairman Mark Liu, before handing over the reins in June, had already predicted that the demand for AI applications looks more optimistic compared to a year ago. Current Chairman C.C. Wei has also indicated that AI applications are just beginning, and he is optimistic like everyone else.
NVDA Stock Forecast
NVDA stock stands at almost $118 currently, and even though the stock plummeted thanks to the geopolitical tensions between the U.S. and China, many analysts expect the stock to make a comeback, for a variety of different reasons.
For one, we have the magnificent anticipation for the Blackwell architecture, alongside expanding their supply, besides the continuous innovation and the non-stop demand, Nvidia will 100% keep soaring, as the firm’s revenue and profits are expected to increase by another $36 billion, which will definitely have a very positive impact on the firm’s stock.
Bearing in mind that Nvidia’s supply chain has seen significant improvements over the past two quarters due to strategic partnerships and enhancements in production facilities. Collaborations with key industry players such as Micron Technology (NASDAQ: MU), Foxconn, Samsung Foundry, and ASML (NASDAQ: ASML), in addition to TSMC, have been instrumental in this progress.
Nvidia has encouraged these manufacturers to invest in newer technologies to expand and improve their production capabilities. This upgrade in the supply chain is crucial for Nvidia’s rapid growth, as the primary obstacle to achieving higher profits was meeting the high demand for GPUs. By maintaining a robust and efficient supply chain, Nvidia secures a competitive edge in the GPU market, which is vital as it competes with other companies in the AI and high-performance computing sectors. With all of these givens, Nvidia is definitely a very good buy, especially if you’re aiming for long-term investment, as the company has not fulfilled its full potential yet.
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