Nvidia inventory (NVDA) is buying and selling close to document highs at $225.30, up about 7% this week, forward of its August 26 earnings report. But historical past carries a warning. The inventory has dropped the day after earnings six occasions since August 2024, and every time its personal chipmaker, Taiwan Semiconductor (TSM), took the hit higher.
Analysts now price TSMC a Robust Purchase with about 27% upside. And a second provider, Ciena (CIEN), has outrun Nvidia sixteen occasions over this previous yr. Right here is why the sample might repeat, and who wins if it does.
Why Nvidia Inventory May Fall Once more on August 26
February 26, 2026 reveals the way it occurs. Nvidia beat estimates with $1.62 per share, grew income 94% to $68.13 billion and guided above forecasts. The inventory nonetheless dropped 5%.
Why?
Buyers fixated on two issues the beat couldn’t repair. Nvidia was incomes barely much less on every sale, and its China outlook had been lower to zero.
Nevertheless, those self same pressures are again, and the bar now sits larger. Nvidia has promised about $91 billion in income, however Financial institution of America expects $94 to $95 billion. Something brief of a big beat now counts as a letdown.
In the meantime, Nvidia’s newest outcomes promise it should preserve roughly 75 cents of each gross sales greenback. Any slip reads as fading pricing energy. And the H20, the chip Nvidia constructed for China, as soon as earned $4.6 billion 1 / 4 however stays locked out of forecasts by export guidelines.
The crowding makes it worse. Nvidia is probably the most actively traded inventory within the US, so any disappointment meets a rush for a similar exit.
That’s the reason Goldman Sachs flags the sell-the-news danger, with the S&P 500 additionally at a document excessive. When everybody says purchase and the value assumes a blowout, simply assembly estimates will get offered.
So the place does the cash cover when Nvidia dips? Six occasions in a row, the reply has been the identical.
The Foundry That Absorbed Each Shock
That reply is TSMC. Throughout all six unfavourable reactions since August 2024, it fell simply 1.76% on common towards Nvidia’s 4.34%, based mostly on Nasdaq closing costs. In Could 2026, it even rose 1.38%.
The reason being business-centric. TSMC builds chips for Nvidia, AMD, Apple, Broadcom and customized designers, so demand misplaced by one buyer typically returns via one other.
The cushion reveals over time too, with TSMC returning 154% since August 2024 towards Nvidia’s 79%.
Analysts have seen. The TipRanks forecast reveals a Robust Purchase from six Buys and one Maintain, with a $545.67 goal, about 30% above the $430.49 worth.
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For context, its Taipei-listed shares commerce close to NT$2,415, about $86 every, with 5 making one US-listed share. Nonetheless, TSMC shouldn’t be the one provider profitable.
Ciena Wins the Greater AI Commerce, Not the Earnings Commerce
The opposite winner is Ciena, and its edge sits outdoors the earnings sample. The agency sells the optical hyperlinks that transfer knowledge between AI servers, and demand has exploded. Its market worth gained about 375% in a yr towards Nvidia’s 23%, a sixteenfold hole on S&P World knowledge.
The enterprise backs the rally. Income grew 40% final quarter, earnings practically quadrupled, and orders value $7 billion wait to be crammed.
Nonetheless, conviction lags the run. The Ciena forecast reveals solely a Reasonable Purchase from ten Buys and 4 Holds. Even so, the common goal of $583 sits about 32% above the $442.79 shut, upside that rivals TSMC’s.
That leaves TSMC because the stronger analyst choose, and Ciena because the momentum play amongst AI shares whose scores haven’t caught up.
One Concept Connects All Three
Put them aspect by aspect and the story is diversification towards dependence. Nvidia wants one structure to maintain clearing ever-higher expectations. TSMC collects from each racer, preserving 67.7 cents of every gross sales greenback in gross revenue per its quarterly outcomes, whereas Ciena wires the race itself.
In brief, Nvidia inventory is a wager on a winner. TSMC and Ciena are bets on the race persevering with, which is why they preserve absorbing the shocks Nvidia can not.
Analyst’s view: The market nonetheless treats Nvidia’s earnings as the general AI verdict. Nevertheless, the strongest conviction sits elsewhere. If August 26 disappoints, the profitable commerce is not going to be shopping for the Nvidia dip. It will likely be proudly owning the corporate Nvidia can not construct chips with out, its foundry TSMC, with Ciena wiring the race round it.
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