Semiconductor Earnings Season Arrives Amid Chip Stock Volatility; NVDA, AMD, AVGO Under Pressure

Semiconductor stocks are entering a critical earnings gauntlet as valuation expectations collide with China export uncertainty and broader inflationThe rate at which prices rise across an economy. concerns. On May 15, chip equities sold off sharply: AMD fell 3.3%, NVDA declined 2-3%, and MU dropped 5%. The selloff reflects a brutal reality: the semiconductor sector, which has been among the best performers year-to-date on AI capex hopes, is now vulnerable to multiple compression as bond yields spike and earnings forecasts face potential downside revision.

NVDA is set to report earnings next Wednesday (May 21), with the market aware that the company has added roughly $1 trillion in market cap in just two weeks. The bar is extraordinarily high; any guidanceCompany-issued forecasts of future financial performance. that suggests China headwinds or data center demand moderation could trigger a sharp drawdownPeak-to-trough decline in portfolio value.. AMD faces its own earnings pressure, with traders watching for data center and AI accelerator demand indicators. Broadcom, which supplies semiconductor components to hyperscalers, is also in the earnings crosshairs. Memory chip makers like Micron face competition from both Broadcom and emerging players like Super Micro, adding to pricing pressure.

One complicating factor is the whipsaw from the China H200 chip export approval. While NVDA rallied 4.4% on the news, the approval also raises questions: if the US is willing to approve advanced chip sales to China, does that suggest China's domestic chip competition is less threatening? Or does it signal that the geopolitical trade-off is so beneficial to Trump that semiconductor export restrictions are being lifted wholesale? The latter scenario could pressure semiconductor margins if Chinese chip makers gain access to US technology.

The technical picture is no less troubling. Relative strength indices on chip indices are elevated, and options positioning shows dealers are short gammaThe rate of change of delta - the option's curvature. in tech, meaning sharp moves in either direction could trigger cascade liquidations. Traders are hedging by rotating into cheaper software, industrial, and consumer names. The narrative around AI capex peak fears, which has lurked in the background for months, is now front and center.