Microsoft's Next-Gen AI Chip Delayed by Six Months: What It Means for Investors

Microsoft's upcoming AI chip, Braga, is facing a six-month delay due to development issues, including unanticipated design changes, staffing constraints, and high employee turnover. The delay raises concerns that the chip may be less competitive compared to Nvidia's products by the time it reaches the market. Mass production is now expected in 2026, instead of 2025. The delay is significant in the fast-moving AI chip market, where development cycles typically take at least two years.

Microsoft's upcoming AI chip, Braga, is facing a six-month delay due to development issues, including unanticipated design changes, staffing constraints, and high employee turnover. The delay raises concerns that the chip may be less competitive compared to Nvidia's products by the time it reaches the market. Mass production is now expected in 2026, instead of 2025. The delay is significant in the fast-moving AI chip market, where development cycles typically take at least two years [1].

The delay in Braga's development comes at a time when the AI chip market is rapidly evolving. Apple, Qualcomm, and MediaTek are expected to launch 2nm chips in late 2026, with TSMC leading production. This shift towards smaller nodes is driven by the demand for more advanced AI capabilities directly on devices [2]. TSMC plans to begin its 2nm tape-out process in the second half of 2025, with volume production targeted for 2026. The chipmaker had nearly 67% of the global foundry market as of Q4 2024, according to TrendForce data.

Meanwhile, Nvidia shares hit an all-time high on Wednesday, with the stock rising 4% to nearly $154 per share. The rally occurred despite lingering investor anxiety about President Trump's move earlier this year to slap fresh export controls on Nvidia’s shipments to China. Nvidia's previous all-time closing high was $149.43, which was achieved last Jan. 6 following President Trump’s election win. The stock is up about 11% since the start of the year, pushing its market cap to $3.75 trillion [3].

Despite the challenges, Nvidia continues to dominate the market for advanced computer chips needed to power energy-guzzling artificial intelligence models. The company's customers include Microsoft, OpenAI, xAI, and Meta. Loop Capital analyst Ananda Baruah raised his price target on Nvidia stock to $250, which, if achieved, would push its market cap to an unprecedented $6 trillion over time.

In summary, the AI chip market is experiencing significant advancements and delays. While Nvidia continues to lead the market with its AI chips, Microsoft's Braga is facing production delays. The shift to smaller nodes and the demand for advanced AI capabilities are driving the market forward, but the competitive landscape remains dynamic.

References:
[1] https://www.gurufocus.com/news/2942532/apple-and-qualcomm-gear-up-for-aidriven-2nm-chips-by-late-2026
[2] https://nypost.com/2025/06/25/business/nvidia-shares-hit-record-high-as-wall-street-shakes-off-anxiety-about-ai-chip-export-controls/