Nvidia (NVDA 0.80%) could be heading towards its biggest moment yet. The artificial intelligence (AI) chip giant is preparing to launch its new architecture, which could be game-changer for the industry given the host of innovative features included in the platform. Nvidia plans to ramp up production of the Blackwell architecture and chip in the fourth quarter.

This comes at a crucial time for the technology company. Nvidia has built an AI empire in recent years and has increased sales by triple digits quarter after quarter. Now that the company’s revenue levels are reaching extremely high levels, triple-digit increases may no longer be sustainable. And competitors have also produced chips that they hope can capture market share. Therefore, it is logical to ask this question: where will Nvidia be six months after the launch of Blackwell? Let’s consider what history has to say – and a few other clues – and find out.

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What to expect from the Blackwell launch

First, a quick recap of Nvidia’s journey so far and what to expect from the Blackwell launch. Nvidia has built dominance in the AI ​​market by developing the most powerful chips and a complete platform of products and services for them. So customers can simply turn to Nvidia to buy the chips, called graphics processing units (GPUs), or they can use the entire Nvidia stack to power their data centers.

This helped the company grow its quarterly revenue to a record $30 billion and gross margin to over 70%. Nvidia also grew net income by triple digits, reporting a profit of more than $16 billion in its most recent quarter.

Thanks to the architecture’s six groundbreaking innovations – from Nvidia’s best chip to date, a powerful preventive maintenance system to ensure system availability, and a fifth-generation NVLink for high-speed – investors are now eagerly awaiting the launch of Blackwell communication between up to 576 GPUs .

As mentioned, Nvidia plans to ramp up production of Blackwell in the coming weeks, and in Nvidia’s most recent earnings report, CEO Jensen Huang gave us hints about customer interest in this new product. Huang said demand has outpaced supply and he expects this to continue next year. Recently, Huang reaffirmed this in an interview with CNBC, calling the demand for Blackwell “crazy.”

Nvidia’s gross margin

All of this led Nvidia to forecast billions of dollars in Blackwell revenue for the fourth quarter. So it won’t be long before Blackwell significantly increases Nvidia’s sales. Additionally, Nvidia is forecasting full-year gross margins in the mid-range 70%, showing us the company’s ability to bring this important product to market while maintaining extremely high levels of profitability.

Now let’s talk about where Nvidia might be six months after launch. A first clue comes from history, which shows us that the stock rose almost 100% in the six months after Nvidia’s last release of a new architecture – Hopper in 2022.

A look at Nvidia’s earnings report for the period ending April 30, 2023, about six months after Hopper’s launch, shows us that demand for the platform and related products was surging. And Nvidia reported record data center revenue during the quarter. So history gives us reason to be confident about Nvidia’s position six months after Blackwell’s impending launch.

And a few other factors make me optimistic for the coming period. As Nvidia streamlines the Blackwell production process and overcomes initial launch costs, it may be able to increase its margins. That may not be as early as six months after launch, but that’s okay. Since the gross margin is already extremely high at over 70%, a later improvement is like the icing on the cake.

Nvidia’s largest customers have significant resources

Nvidia does not disclose the percentage of revenue it generates from specific customers, but analyst and news reports suggest that these are the company’s largest customers Microsoft, Metaplatforms, AmazonAnd alphabet. This is positive because these players all have the resources to further increase their investments as the AI ​​boom continues.

In addition, recent anecdotes show how eager market giants are to get into Nvidia products. oracle Co-founder Larry Ellison recently said he and Tesla Boss Elon Musk “begged” Nvidia for more chips. This suggests that even as rivals roll out new chips, industry bigwigs still flock to Nvidia first.

Of course, as mentioned above, Nvidia may not report triple-digit growth every quarter as it has been doing recently. So six months after Blackwell’s launch, we could be looking at a slower growth rate than Nvidia has in the past. However, this is because Nvidia has already grown its revenue to staggering levels, making it difficult to continue growing at this pace. So a slowdown should not be viewed as a negative.

All of this means that six months after Blackwell’s launch, Nvidia may still be struggling to keep up with huge demand – but the company could also report billion-dollar platform sales and solid profit growth. This could also lead to fantastic stock performance. But even if shares don’t rise as much as they did after Hopper’s launch, Nvidia is well-positioned to deliver a long-term profit for investors.