Semiconductor stocks fell broadly on Monday, two sessions before Nvidia's second-quarter earnings report, as traders trimmed exposure ahead of the sector's biggest catalyst of the year. Nvidia's own history of negative day-of price swings and a rising put-call ratio suggest a beat alone may not lift the group, while some analysts see a path to a 20% drop if the company misses.
The iShares Semiconductor ETF fell 4% to $501.17 on Monday. The iShares U.S. Technology ETF dropped 2% to $243.24, a smaller decline that marked the sell-off as chip-specific rather than a broad tech pullback. Intel led the slide, down 5% to $85.98. AMD followed, down 4% to $454.36, and Taiwan Semiconductor slipped 3% to $406.40. No company-specific headline drove Intel lower, and the selling concentrated in chipmakers rather than the wider market.
Nvidia's Earnings Pattern Feeds the Caution
Nvidia reports second-quarter fiscal 2027 results on August 26 after the close, a company-confirmed date. The chipmaker has beaten Wall Street EPS estimates for four consecutive quarters, yet the average day-of price move across its last five reports was down 2%. Its most recent quarter closed down 2% despite a 5.4% EPS surprise, with guidance nuance around China data-center compute driving the reaction more than the headline print. Options traders reflect the same caution: Nvidia's full options chain carries a put-call ratio of 0.61, rising to 0.82 for the earnings-week expiration.
Wall Street Split Between Upside and a 20% Drop
Nvidia reclaimed its place as the most valuable company on the market with a $5.1 trillion market cap. Shares were headed toward a seventh consecutive loss on Monday. Wall Street targets $2.08 in per-share earnings, growth of more than 98% from a year earlier, and $92 billion in sales, growth of more than 97%.
However, some analysts see further room to fall. If Nvidia misses, the stock could drop 20% to $165, the level it touched during its late-March slide, according to 24/7 Wall St. That comparison draws on Oracle, which fell more than half after missing earnings. IBM also fell 20% on a miss. Nvidia's own forecasts are usually precise, guiding within a 2% range of its stated numbers, which leaves little margin for error heading into the report. Microsoft and Meta are also among the customers building competing AI chips, a threat to the near-monopoly behind Nvidia's $91 billion quarterly revenue forecast.
Bulls Point to Vera Rubin and Strong Demand
Not every signal points lower. Needham holds a buy rating on Nvidia with a $270 price target. The firm also expects 91,000 racks of Vera Rubin processors to ship in 2027. Chief Executive Jensen Huang reportedly said in July, per Bloomberg: "Vera Rubin is already in production. Giant amounts of production incoming," though he did not give a timeframe. KeyBanc's supply-chain checks also confirm that AI data-center demand remains strong.
Funds already own 42% of Nvidia's outstanding shares.
Sources: 24/7 Wall St., Investor's Business Daily, 24/7 Wall St.
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