AMD, AVGO, NVDA Earnings Season Heating Up; AI Capex Demand Sustains Momentum

Semiconductor earnings are arriving in waves, and the narrative is holding: AI capex demand remains insatiable, despite macro volatility. AMD, Broadcom, and NVIDIA are all reporting earnings in the near term, with street expectations calibrated to sustained AI infrastructure investment. A critical data point emerged this week: Arista Networks' commentary on AMD deployment rates in hyperscaler networks, with AMD likely to supply switches in 20-25 percent of deployments, up "meaningfully" from prior periods. This suggests that the semiconductor supply chain is not yet saturated, and that competition is driving adoption rather than inventory bloat.

NVIDIA's earnings on May 21 will be the marquee event, but the broader sector commentary is equally important. Broadcom, which supplies AI networking and optical components, is facing potential capacity constraints, per some analyst commentary. AMD is benefiting from competition with NVIDIA and is winning design wins in both CPUs and accelerators. The fact that all three mega-cap chips are holding gains despite the Friday selloff and global bond rout suggests that fund flows into the AI capex narrative are structural, not sentiment-driven.

One risk to watch is valuation compression. Despite the 20 percent rally since early May, semiconductors are trading at valuations that leave little room for disappointment. If earnings growth slows, or if guidanceCompany-issued forecasts of future financial performance. suggests a deceleration in hyperscaler spending, multiple contraction could be swift. Additionally, the China export approval for NVIDIA chips could shift competitive dynamics: if Chinese firms can now access NVIDIA's latest silicon, that could reduce the urgency for them to buy from AMD or other second-sources in the near term.

The skeptical view is that semiconductor earnings are already priced for perfection, and that any sign of capex normalization or inventory correction will spark a repricing. Some analysts have raised concerns about whether the AI capex cycle can sustain this pace indefinitely, or whether we are approaching "capex peak" for the current cycle. However, earnings beats, strong guidanceCompany-issued forecasts of future financial performance., and unchanged order books are working in the sector's favor for now.