Nvidia stock is tanking after reports of an AI chip design flaw

Nvidia CEO Jensen Huang presents the new AI chip Blackwell at the company’s own developer conference in March.Photo: Andrej Sokolow/picture alliance (Getty Images)

Nvidia shares fell sharply in pre-market trading — about 13% — and remained down by around 8% after the market opened on Monday. The company and its Big Tech peers dragged the Nasdaq and put the tech-heavy index on track to have its worst day since March 2020.

The reason behind Nvidia’s decline was a report over the weekend claiming that its newest AI chips in its Blackwell series are delayed due to design flaws. The Information reported Saturday, citing an unnamed Microsoft employee, that Nvidia told Microsoft about the delay, which could set back deliveries by three months or more.

The first Blackwell chip was unveiled by Nvidia CEO Jensen Huang in March. Five times faster and more powerful than its predecessor — Nvidia’s already-very-powerful, $40,000 H100 chip — the world’s largest tech companies such as Meta, Google, and Microsoft have lined up to buy Blackwell chips and have already spent tens of billions of dollars. Delays to Blackwell’s release would have major implications for the companies, which rely on the AI chips to run AI software. Left without their hardware orders, companies may face a slowdown as they race to develop the latest AI software tools and chatbots.

Nvidia is facing another, unrelated snag, too. Officials at the Department of Justice are reportedly investigating complaints from Nvidia’s rivals for allegedly abusing its dominance of the AI chip market.

Other tech companies whose stocks suffered Monday included Meta, Microsoft, Google, Tesla and Apple — which all sank for various reasons. Apple shares, for example, fell after Warren Buffett’s Berkshire Hathaway halved its stake in the company. Google shares have been on the decline since Alphabet reported earnings — and hefty AI spending — two weeks ago.