Semiconductor Earnings Heat Up; AMD, AVGO, NVDA Navigate Capex Cycle and China Uncertainty

Semiconductor earnings season entered a critical phase on May 15, with traders keenly watching AMD, AVGO, and NVDA navigate a complex backdrop of AI demand, supply chain normalization, and shifting China policy. The sector has been the performance leader for months, but valuation compression risk and forward guidanceCompany-issued forecasts of future financial performance. on capex cycles are now at the forefront of investor minds.

AMD faces margin pressure after reporting Q1 results; the stock was down 3.3% on May 15 following China export policy shifts and Taiwan supply chain jitters. AVGO also weakened as Raymond James noted that ANET's customer concentration risk with AMD and Broadcom's own fab capacity constraints could limit upside. NVDA, despite the H200 China export approval, faces the challenge of justifying its massive 20% rally since early May against next week's earnings call, where management will need to prove demand strength justifies sustained capex spending.

A curious dynamic emerged: memory chip stocks are becoming cheaper (lower P/E multiples) even as share prices soar. Bloomberg data showed the highest-performing semiconductor names are now trading at tighter valuations relative to their historical norms and peer groups, a reversal of typical bull market momentumThe empirical fact that winners keep winning over the medium term. logic. This suggests institutional buyers are slowly taking profits while retail and algo traders continue chasing momentum into IPOInitial Public Offering - a company's first public sale of stock. windows (CBRS up 68% intraday on oversubscription, ONDS trading volume exceeded NVDA despite 1000x smaller market cap).

The key debate centers on capex cycle durationBond price sensitivity to interest rate changes. and China revenue sustainability. If the US-China rapprochement proves durable, NVDA's $1T market cap addition is justified; if it collapses, the stock becomes vulnerable to a sharp repricing. AMD's competitive position in data center and consumer depends on manufacturing capacity and yield rates, both of which are tight given the rush to build out AI infrastructure. AVGO's chipset exposure to networking and data center gear positions it as a levered play on capex intensity, but rising interest rates (and the bond selloff) increase financing costs for hyperscaler expansion.