Semiconductor stocks pulled back in Friday premarket trading, with Nvidia, AMD, and Intel all lower as investors locked in gains from Thursday's powerful post-earnings rally. Nvidia and AMD each fell about 1.5%, while Intel dropped more than 2%, reversing some of the previous session's surge.
Thursday's rally was fueled by Nvidia's better-than-expected fiscal second-quarter results and a forecast for 70% revenue growth in fiscal 2028. The stock jumped 8.7%, its biggest one-day gain in over two years, adding roughly $442 billion to its market value. The Philadelphia Semiconductor Index rose 2.3% on the day, but the momentum has faded as traders reassess valuations and positioning.
Profit-Taking and Crowded Trades
The pullback reflects a combination of profit-taking, crowded positioning, and a market that is no longer rewarding merely good results. Bank of America analyst Vivek Arya cautioned that while semiconductor demand remains solid, three near-term headwinds could cap chip stocks: higher interest rates, concerns about circular AI financing, and heavy investor positioning. BofA estimates chip stocks are about 13% overweight relative to the S&P 500 and sees 10% downside risk for the SOX index, though Arya remains constructive, calling the setup compelling.
Marvell's Selloff Highlights High Bar
Marvell Technology provided a fresh warning about expectations. Despite quarterly revenue and adjusted earnings slightly beating forecasts and management raising longer-term targets, shares fell more than 8% premarket. Investors had hoped for fiscal 2029 guidance, but management delayed that until its October investor event, according to Infrastructure Capital Advisors CEO Jay Hatfield. The reaction illustrates how demanding AI valuations have become—companies can beat estimates and raise forecasts yet still disappoint if investors were positioned for something bigger.
This dynamic is relevant to Nvidia after Thursday's rally. The results confirmed powerful AI demand, but the stock's jump also raised the hurdle for additional upside. AMD and Intel face similar sentiment risk because their valuations increasingly depend on continued data-center investment. Marvell did not prove that AI spending is weakening, but it showed the margin for disappointment is shrinking.
Jackson Hole Adds Macro Risk
Friday also brings a macro event capable of moving technology valuations. Federal Reserve Chair Kevin Warsh is scheduled to speak at Jackson Hole as investors seek clarity on inflation and the path of interest rates. The 10-year Treasury yield hovered around 4.68%, while futures implied about a 35% probability of a September rate increase and fully priced a hike by December. Higher yields reduce the present value of future earnings, making growth stocks more sensitive to rate expectations.
“Jackson Hole is the focal point for global markets,” Erlen Capital Management managing partner Bruno Schneller told Reuters, adding that investors want clarity on the Fed's reaction function rather than another hawkish or dovish signal. That gives traders a reason to reduce semiconductor exposure after Thursday's windfall instead of carrying maximum risk into Warsh's speech.
The broader tech rally, which saw the Nasdaq jump 411 points on Nvidia's forecast, now faces a test as investors weigh whether AI-driven gains are sustainable. Some analysts, like Michael Burry, have flagged valuation concerns despite strong fundamentals. Meanwhile, AMD dipped and Intel gained earlier this week as Nvidia's AWS deal reshaped the AI chip rivalry, but Friday's broad selloff suggests sentiment is turning cautious.
As the market digests Nvidia's results and awaits Jackson Hole, the near-term direction for chip stocks may hinge on whether the Fed signals a more accommodative stance. Until then, profit-taking and position squaring are likely to keep volatility elevated.
This article is for informational purposes only and does not constitute financial advice.
