Delays In NVIDIA’s Delivery Negatively Impact Earnings

(CTN News) – As a result of a tight supply of networking components made by chipmaker NVIDIA, Applied Digital (APLD.O), opens new tab lowered its full-year expected earnings on Tuesday, sending shares of the company plunging nearly 23%.

Nvidia’s InfiniBand, which acts as an ethernet cable, linking clusters of chips across servers, has been delayed by the company.

It is possible to perform AI computations using InfiniBand. Nvidia’s artificial intelligence chips and accompanying technology have been in high demand as companies rush to adopt generative artificial intelligence.

While the company did not report any issues with the supply of AI chips on its earnings call, it said it had been forced to delay deliveries of Nvidia graphics processing units (GPUs) due to InfiniBand bottlenecks.

We could have taken a significant number of GPUs in December, but there is no reason to do so, the company stated, adding that taking delivery would be detrimental.

However, Applied Digital has reported that deliveries of the networking equipment have improved in recent weeks, suggesting that the issue may be easing.

It is now expected that the company’s total revenue for 2024 will be below its previous range of $385 million to $405 million.

Additionally, it expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be below the previous forecast range of $195 million to $205 million.

A revised forecast for the metrics for the full year was not disclosed by Applied Digital.

Revenue for the second quarter was also below expectations. According to LSEG data, the company reported revenue of $42.2 million for the quarter ended Nov. 30, a figure below analysts’ average estimate of $57.3 million.

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