There is big news coming from NVIDIA.
According to Guo Mingchi, an analyst at Tianfeng International Securities, the latest industry chain order information for the Nvidia Blackwell GB200 chip shows that Microsoft is currently the world's largest GB200 customer. The order volume surged 3-4 times in the fourth quarter of this year, exceeding the total order volume of all other cloud service providers.
Guo Mingchi stated in a new report that the expansion of production capacity for Blackwell chips is expected to start in early Q4 2024, with shipments expected to be between 150000 and 200000 pieces in Q4. It is expected that shipments will significantly increase by 200% to 250% in Q1 2025, reaching 500000 to 550000 pieces.
At the market level, Nvidia's stock price continues to soar, with a cumulative increase of 186.5% this year, but Wall Street remains very optimistic about Nvidia's future prospects. Among them, Bank of America stated that Nvidia's earnings per share (EPS) for the 2025-26 fiscal year will continue to rise by 13% to 20%, and will raise Nvidia's target price to $190; Goldman Sachs believes that Nvidia's valuation is close to the median price to earnings ratio of the past three years, and compared to its peers, its historical valuation is relatively low.
NVIDIA's strong material
According to Guo Mingchi, an analyst at Tianfeng International Securities, the latest industry chain order information for the Nvidia Blackwell GB200 chip shows that Microsoft is currently the world's largest GB200 customer. The order volume surged 3-4 times in the fourth quarter of this year, exceeding the total order volume of all other cloud service providers.
Guo Mingchi stated in a new report that the expansion of production capacity for Nvidia Blackwell chips is expected to commence in early Q4 2024. Considering the yield rate and testing efficiency, it is expected that the shipment volume in the fourth quarter of 2024 will be between 150000 and 200000 pieces, and the shipment volume in the first quarter of 2025 is expected to significantly increase by 200% to 250%, reaching 500000 to 550000 pieces.
This means that Nvidia may only need a few quarters to achieve its sales target of one million units. Nvidia founder and CEO Huang Renxun stated in a previous interview that the company's upcoming Blackwell chip has been fully put into production and demand is "crazy".
Currently, Microsoft is the most active customer in purchasing the Blackwell GB200. In addition to the GB200 NVL36 order originally scheduled for testing in Q4 2024, Microsoft recently plans to obtain customized GB200 NVL72 units before the NVIDIA DGX GB200 NVL72 (also known as the reference design) enters mass production (mid-2025).
Microsoft's order volume for Blackwell GB200 in the fourth quarter of 2024 has surged from 300-500 cabinets (mainly NVL36) to approximately 1400-1500 cabinets, of which approximately 70% are NVL72, with the highest growth rate reaching 400%. Subsequent orders will mainly focus on NVL72.
According to Guo Mingchi's updated industrial chain order information, Microsoft has recently discussed with key component suppliers about capacity expansion in the fourth quarter of 2024 (approximately 1.5 to 2 times or more than the original capacity) and is preparing to stock up in advance.
Foxconn and Guangda are responsible for delivering Microsoft's Blackwell system. According to surveys by both companies, Microsoft's Blackwell GB200 order volume is far ahead of other cloud service providers, and it is said that the company is rapidly expanding its AI computing capabilities.
Microsoft plans to prioritize the deployment of Blackwell GB200 in low-temperature data centers such as Washington State in the United States, Quebec City in Canada, Helsinki in Finland, etc., to proactively mitigate potential impacts caused by insufficient cooling system optimization time.
Other cloud service providers' orders include Amazon's GB200 NVL36 orders for 300-400 cabinets in Q4 2024, as well as Meta's focus on Ariel architecture rather than Bianca, both of which have significantly lower order volumes than Microsoft.
It is worth mentioning that Microsoft Azure official account recently posted on social media that the company has obtained an AI server equipped with Nvidia Blackwell GB200 super chip, becoming the first global cloud service provider to use the Blackwell system.
Guo Mingchi stated that Microsoft's Blackwell GB200 key component supplier plans to start large-scale production and shipment in the fourth quarter of 2024, which will promote its supply chain performance earlier than other cloud service providers.
NVIDIA's rampage
At the market level, Nvidia's stock price continues to soar, reaching a historic high again this week with a cumulative increase of 186.5% for the year. The latest total market value has climbed to $3.39 trillion (approximately RMB 24 trillion).
Despite the astonishing increase, several Wall Street institutions remain very optimistic about Nvidia's outlook.
Among them, Bank of America analysts Vivek Arya, Duksan Jang, and others stated that buying Nvidia is a "once-in-a-generation opportunity", and Nvidia's current valuation is still attractive because its PEG index (price to earnings ratio/year-on-year compound growth rate of earnings per share) for 2025 is only 0.6 times, far below the average of 1.9 times for other companies in the "Big Seven" of US technology stocks.
Bank of America's continued optimism towards Nvidia is mainly driven by the following three factors:
1. Recent industry events (TSMC performance, AMD AI incident, conferences with industries such as Broadcom and Micron Technology, speed of release of large-scale language models, capital expenditure reviews from top ultra large companies, and NVDA management's "crazy Blackwell demand");
2. NVIDIA's enterprise partnerships (Accenture, ServiceNow, Oracle, etc.) and software products (NIM services) are undervalued;
3. Ability to generate $200 billion in free cash flow (FCF) within the next two years.
Bank of America expects Nvidia's earnings per share (EPS) to continue to rise by 13% to 20% for the fiscal year 2025-2026, and has raised Nvidia's target price to $190. It is expected that by 2027, Nvidia's earnings per share will increase by more than 5 times to $5.67, and the price to earnings ratio will drop to a milder 24 times.
Goldman Sachs also believes that Nvidia's current pricing is reasonable, with its valuation close to the median price to earnings ratio of the past three years, and its historical valuation relatively low compared to its peers.
Goldman Sachs pointed out in its latest report that Blackwell's launch and capacity ramp up are not only driving forces for revenue growth in the near and medium term, but also for expanding Nvidia's competitive advantage.
Goldman Sachs stated that the lead time for the Blackwell GB200 product is about 12 months, making its data center business highly forward-looking. Considering the current strong demand for AI, Nvidia's chip supply will remain tight in the foreseeable future.
Goldman Sachs stressed that Sovereign AI, autonomous vehicle and humanoid robots are also important driving forces for Nvidia's current and future growth in the AI field.
Goldman Sachs expects that the growth of Blackwell based chip products will continue as planned, with the product contributing billions of dollars in revenue by the first quarter of next year and further growth expected in April and beyond.