On the eve of the financial report, it was reported that NVIDIA's GB200 "technical issues" have been resolved, and production is rapidly increasing

On the eve of the quarterly earnings report, NVIDIA received a key piece of good news: the technical barriers of its next-generation GB200 AI server rack have been overcome.

According to the Financial Times report on May 28, NVIDIA's supply chain partners have solved a series of technical challenges related to the GB200 AI server rack, and shipments are rapidly increasing. This progress alleviates market concerns about its $43 billion quarterly revenue target and injects confidence ahead of Wednesday's earnings disclosure.

Key Technical Breakthroughs of GB200 Alleviate Market Concerns

Last week, at the Computex conference in Taipei, NVIDIA's partners Foxconn, Inventec, and Wistron announced that the GB200 rack began shipping at the end of the first quarter, with production capacity rapidly increasing.

An engineer involved in the manufacturing revealed:

Our internal tests showed there were connectivity issues... The supply chain worked with NVIDIA to resolve these problems, which occurred two to three months ago.

These included overheating issues caused by 72 high-performance GPUs, liquid cooling system leaks, software bugs, and inter-chip connectivity issues, all of which threatened NVIDIA's annual sales targets and negatively impacted the company's stock price.

As NVIDIA's next-generation AI infrastructure, the GB200 rack is considered a "computing monster": a single unit integrates 36 "Grace" central processing units and 72 Blackwell graphics processing units, connected through NVIDIA's NVLink communication system.

Chu Wei-Chia, an analyst at consulting firm SemiAnalysis in Taipei, stated:

This technology is indeed very complex. No company has attempted to get so many AI processors to work simultaneously in a server in such a short time frame. NVIDIA did not give the supply chain enough preparation time, leading to (supply) delays. As manufacturers increase rack production in the second half of the year, the inventory risk of the GB200 will be alleviated.

These breakthroughs have given NVIDIA a boost. Last year, when CEO Jensen Huang announced the launch of Blackwell, he promised that the product would significantly enhance the computing power required for training and using large language models. At the same time, NVIDIA is also preparing for the launch of the next-generation GB300 AI rack, which features enhanced memory capabilities designed to handle more complex inference models.

Market Focus on NVIDIA's Earnings Report

Currently, the market focus has shifted to NVIDIA's first-quarter earnings report scheduled for release on Wednesday. This $3.2 trillion company is seen as a bellwether for AI demand. Investors are most eager to know whether the strong AI demand and optimistic outlook of the past few years can continue.

Morgan Stanley noted in a report on May 19 that the path for NVIDIA to return to growth in the second half of the year has become clear. At the same time, several mid-term concerns that have troubled the market are being resolved one by one, including customer digestion cycles, GB200 bottlenecks, and ecosystem collaboration issues. NVIDIA is expected to return to strong growth in the second half of 2025 Despite NVIDIA's stock price rebounding about 40% over the past seven weeks, it is still approximately 14% lower than the historical high set in January. Data shows that the current price-to-earnings ratio of the stock is about 28 times, significantly lower than its five-year average valuation of 40 times.