U.S. semiconductor stocks show divergence! Is NVIDIA's Q3 performance still the "trump card" for the U.S. stock bull market?
The semiconductor stocks in the US market are showing a divergence, with NVIDIA set to announce its Q3 financial report on November 20. The market is focused on its performance and the Blackwell chip issue. Since the 2024 US presidential election, chip stocks have dropped by 3%, while the S&P 500 index has risen. NVIDIA's stock price has rebounded by 45% since July, with a cumulative increase of 205%. However, many peers have performed poorly, with some companies seeing declines of over 40%. Investors are hopeful that NVIDIA's financial report will bring growth prospects to the semiconductor industry. Analysts expect NVIDIA's Q3 revenue to increase by 83% year-on-year to $33.08 billion, and EPS to rise by 94% year-on-year to $0.72
Investment Insights - AI giant NVIDIA is set to announce its third-quarter earnings after the U.S. stock market closes on November 20. While the market is focused on NVIDIA's high expectations for performance and the Blackwell chip issue, it is also using NVIDIA as an "industry benchmark" to predict whether semiconductor stocks can maintain their strength in the future.
Since the U.S. presidential election in 2024, chip stocks have fallen by 3%, while the S&P 500 index has risen by a similar margin. Semiconductor stocks have been a strong driver of the U.S. stock market bull run over the past two years, but they have declined against the trend in the past four months, with only NVIDIA (NVDA.US) remaining resilient.
Since the slump in July, NVIDIA's stock price has rebounded significantly, rising 45% from its August low. As of the time of writing (November 20), NVIDIA has accumulated a 205% increase, over 1100% in the past two years, and reached a historic high after the U.S. election.
In contrast, many of NVIDIA's peers, especially smaller companies, have seen their stock prices drag down the semiconductor sector.
For example, Super Micro Computer (SMCI.US), plagued by accounting fraud and delisting threats, saw its stock price plummet by 80-90% from its March peak. Qorvo (QRVO.US) and Mobileye (MBLY.US) have both dropped over 40% since the second half of the year.
"Second place for a millennium" Advanced Micro Devices (AMD.US) has fallen about 14%. Companies like Intel (INTC.US), Micron Technology (MU.US), KLA Corp (KLAC.US), Applied Materials (AMAT.US), and Microchip (MCHP.US) have all seen their stock prices decline by over 20%.
Currently, investors are closely watching "big brother" NVIDIA's third-quarter earnings report, hoping to find signs of continued growth in the semiconductor industry. According to Factset's survey data of analysts, NVIDIA's Q3 revenue is expected to increase by 83% year-over-year to $33.08 billion, with EPS expected to rise 94% year-over-year to $0.72.
Tom Essaye, founder of Sevens Report, stated in an interview with Yahoo Finance, "It all depends on the guidance. This is a growth narrative. We all know this is the future, the next big thing. They need to keep us excited with this report."
However, some analysts have pointed out that as market breadth expands and matures, the impact of artificial intelligence driving the market higher may not be as pronounced in next year's U.S. stock market bull run.
Essaye noted, "NVIDIA is not the complete market driver it once was."
Morgan Stanley Chief Investment Officer Mike Wilson predicts a target price of 6,500 points for the S&P 500 index over the next year, and he has not focused too much on the impact of AI stocks, instead mentioning that the Federal Reserve's interest rate cuts next year and the continuous improvement of business cycle indicators will promote corporate profit growth
