Amazon Web Services (AWS) has paused its orders for Nvidia's Grace Hopper solutions consisting of an Nvidia-designed Grace CPU and H100 GPU, opting instead to wait for the upcoming, more powerful Grace Blackwell superchips that include the Blackwell B200 GPU. This decision reflects a strategic move as AWS essentially wants to deploy the latest products and take advantage of its enhanced AI processing power, reports Financial Times.
Nvidia introduced its Blackwell processors in March, claiming they would be four times as powerful as their predecessors for training AI large language models (LLMs) and will also enable training of larger LLMs. AWS, a leading cloud computing provider, has already shifted its orders from the Grace Hopper chip, which was launched in August, to the new Grace Blackwell model due to the short interval between their releases.
Pricing details for the new Grace Blackwell solutions highlight their premium status. Analysts estimate that a GB200 chip could cost as much as $70,000, according to media reports. That might even be lower than actual pricing. A full NVL72 server rack equipped with the new hardware could cost up to $3 million, indicating a significant investment for companies looking to use the latest AI processors.
AWS continues to offer other Nvidia chips, such as the H100, to its cloud customers. Despite this, Nvidia's stock, which nearly doubled in value earlier this year due to high demand for AI chips, has struggled to maintain its upward momentum since the Blackwell announcement in March, Financial Times notes.
The new Blackwell chips should be entering production soon, with a full release slated for the fourth quarter. Analysts foresee a temporary hiatus in AI chip demand during this production ramp-up. As a result, investors are concerned about a potential decrease in demand during the transition between Nvidia's old and new product cycles.
Analysts expect Nvidia to report a significant increase in sales for the first quarter, driven by a surge in AI infrastructure investment by major cloud service providers. However, there is apprehension about a possible pause in demand as companies await the newly announced Blackwell chips.
In general, despite the potential dip in demand, analysts are optimistic. They believe new cloud, enterprise, and sovereign customers will absorb the available supply of the existing Hopper chips during the transition.
