Nvidia (NASAQ:NVDA) stock is down more than 6% today despite promising news regarding Samsung’s fourth-generation high bandwidth memory (HBM3) chips. Indeed, the HBM3 chips have been approved by Nvidia for use in its processors for the first time ever.
For now, the chips will be used within Nvidia’s graphics processing unit (GPU), specifically its Chinese-market data center GPU called the H20. Interesting, the H20 has been developed specifically for China, while “in compliance with U.S. export controls.”
It was previously unclear whether Nvidia would end up using Samsung’s HBM3 chips in its other artificial intelligence (AI) centric processors, or if there are additional protocols necessary for that to happen.
Samsung’s HBM3 chips have gained approval at a good time for the industry. Indeed, Nvidia and other chipmakers have struggled to keep up with the surging demand for generative AI-optimized GPUs.
Along with Samsung, there are actually only two other primary producers of HBM — SK Hynix and Micron (NASDAQ:MU). With limited inventory of HBM3 in circulation, Nvidia would like Samsung to quickly “clear its standards so that it can diversify its supplier base.”
Nvidia is in some sense positioning itself to compete with Sk Hynix, the lead producer of HBM3. In fact, SK Hynix is already working to increase its production of denser, more advanced HBM3E memory and taper off its production of HBM3.
There is some speculation that Samsung could begin supplying Nvidia with its HBM3 as early as next month.
What Does This Mean for NVDA Stock?
NVDA stock is in the red today after a fairly disappointing series of Big Tech earnings. Indeed, both Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Tesla (NASDAQ:TSLA) are the culprits behind today’s downswing after they each failed to impress investors with their respective second-quarter earnings results.
Still, Nvidia remains king of Wall Street. The stock is up more than 135% year-to-date as one of the biggest winners of the AI craze this year. Analyst upgrades on NVDA stock continue to pile up as the chipmaker positions itself for a big close to the year.
Investors are currently eagerly awaiting Nvidia’s upcoming earnings report, which is estimated to arrive on Aug. 28.
On the date of publication, Shrey Dua held LONG positions in NVDA and GOOG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
