NVIDIA (NVDA, Financial) has resolved significant technical issues with its new GB200 AI server rack, including overheating and liquid cooling leaks. This progress, confirmed by partners like Foxconn, has led to a rapid increase in production capacity since the end of the first quarter.
The breakthroughs come ahead of NVIDIA's quarterly earnings report, alleviating concerns about meeting its $43 billion revenue target. The GB200 rack, featuring 36 "Grace" CPUs and 72 "Blackwell" GPUs connected via NVIDIA's NVLink system, had faced challenges such as software vulnerabilities and inter-chip connection issues.
According to SemiAnalysis analyst Chu Wei-Chia, NVIDIA's supply chain faced delays due to the complexity and rapid deployment of the technology. However, with increased production expected in the latter half of the year, inventory risks should diminish.
Investors are now focused on NVIDIA's upcoming earnings, as the company is a key indicator of AI demand. Despite a recent 40% rebound in stock price, NVIDIA shares remain about 14% below their January peak, with a current P/E ratio of 28, compared to a five-year average of 40.
