nvidia's gamble: managing supply amidst skyrocketing gpu demand
Santa Clara, Wednesday, 29 January 2025.
Nvidia is confronting a significant challenge as it confirms a looming shortage of its highly anticipated RTX 5090 and RTX 5080 graphics cards. This admission of potential stock-outs highlights the intense demand for these products. The scarcity is exacerbated by reports of scalpers capitalizing on the situation and companies leveraging these GPUs for AI applications, quickly depleting existing inventory. In the UK, some retailers have reported RTX 5090 stocks below ten units. Nvidia’s revelation comes after heightened consumer interest, with many enthusiasts, including gamers, eager to secure the latest technology. As part of its strategy to counter the shortage, Nvidia has suggested customers visit major retailers early. This strategy aims to prevent prolonged shortages, which could impact the company’s revenue and stock market valuation as investors scrutinize Nvidia’s handling of the situation. The release continues to captivate with its mix of innovation and scarcity.
Market response and stock implications
The announcement has triggered significant market reaction, with Nvidia’s stock experiencing a 15% decline [8]. This sharp drop has erased nearly $500 billion from the company’s market value [8]. The timing is particularly crucial as it coincides with emerging competition in the AI sector, notably the success of Chinese AI models like DeepSeek [8]. These developments have led investors to question the long-term demand for Nvidia’s AI chips [8].
Supply chain strategies
Nvidia has implemented immediate measures to manage the situation. The company plans to launch MSRP models with limited quantities for manufacturers [8]. The RTX 5090 and 5090 D models, featuring the new Blackwell GPU architecture with 21,760 CUDA cores and 32 GB GDDR7 memory, will begin sales on January 31, 2025 [8]. Reports indicate enthusiastic consumer response, with PC gamers in the U.S. already camping outside retailers like MicroCenter [8][1].
Technical considerations
Recent performance tests offer some reassurance to potential buyers with existing hardware. The GeForce RTX 5090 shows only a 1% performance loss when used with PCIe 4.0 motherboards [8]. This minimal bottleneck suggests compatibility with current systems won’t significantly impact performance [8]. Meanwhile, manufacturers like ASUS are showcasing new RTX 50 series cards, including the flagship ROG Astral LC GeForce RTX 5090 [8].
AI sector impact
The shortage is particularly significant given the increasing use of these GPUs in AI applications. Smaller companies are rapidly acquiring RTX 5090s for AI development [1], contributing to the inventory depletion. This trend mirrors similar supply constraints seen with Intel’s Arc B580 release in December 2024 [1]. Industry experts suggest this could represent a broader shift in GPU utilization beyond traditional gaming markets [5].