Barclays' latest supply chain checks for Nvidia (NASDAQ:NVDA) have returned positive results, the investment bank said Wednesday.
Barclays said Wednesday its recent conversations with industry insiders have suggested that Nvidia's production capacity for its Hopper chips is scaling faster than previously anticipated, signaling strong demand and potential revenue upside.
According to its report, Nvidia's Hopper chip production reached 400,000 units per month in Q2, ahead of schedule. The firm now expects production to hit 600,000 units per month by the end of Q3, up from the previous estimate of 500,000 units. This accelerated capacity ramp is seen as a key driver of Nvidia's revenue growth in the coming quarters.
“We would expect some of that capacity is related to the lower end H20, as China sales pick up off the bottom, but even assuming ~15% of the mix and standard utilization rates it would point to ~$3B in upside in July vs. our prior numbers,” analysts said.
Barclays has adjusted its compute revenue forecast for Nvidia, raising its estimate for October to $25.2 billion, up from the prior $22.2 billion. Analysts emphasize that this better-than-expected capacity expansion could provide more than a 30% upside compared to previous projections.
Despite concerns over potential delays with Nvidia's next-gen Blackwell chips, Barclays remains optimistic. Initial samples of Blackwell are already in the supply chain, with no significant updates on delays.
Analysts note that some sources anticipate a delay of just two weeks, contrasting with earlier expectations of a three-month delay.
“To us this seems like the normal cadence of a qualification cycle, not a material design flaw. Current testing capacity for Blackwell is expected to get to over 200K units by year end with Q125 at 250K,” analysts continued.
Barclays reiterated a Neutral rating on Nvidia stock and the price target of $145.