Qualcomm was the worst performer in the S&P 500 on Tuesday, dropping 11.5% as chip stocks pulled back sharply from a record-setting AI-driven rally. The selloff was triggered by a hotter-than-expected retail inflation report that reignited fears the Fed will delay rate cuts, compounded by stretched technicals — QCOM's RSI had hit 88 before the drop. Despite a strong fiscal Q2 and a fresh $20 billion buyback authorization, the stock led a sector-wide profit-taking wave.
Nvidia closed at a record $220.78 on Tuesday, its fifth consecutive day of gains, on volume of 158 million shares. The market is positioning ahead of Nvidia's fiscal Q1 2027 report on May 20, where consensus calls for $78.8 billion in revenue (up 78.7% YoY) and adjusted EPS of $1.77. CEO Jensen Huang has pointed to $500 billion in high-confidence Blackwell/Rubin demand through 2026 and a $1 trillion opportunity pipeline through 2027.
On May 12, Citi analyst Atif Malik lifted Broadcom's PT from $475 to $500 and maintained a Buy rating ahead of fiscal Q2 earnings on June 3. Broadcom's AI semiconductor revenue jumped 106% YoY in fiscal Q1 to $8.4 billion, now comprising 43%+ of total revenue. Citi projects total AI sales reaching $115 billion by 2027, naming six major AI customers including Google, Meta, Anthropic, and OpenAI.
AMD is trading near its 52-week high of $469.21, reached May 11, continuing a tear after Bernstein upgraded to Outperform with a $525 target (from $265) and Goldman Sachs also upgraded to Buy. Eight firms hiked price targets after Q1 earnings showed data center revenue of $5.78 billion, up 57% YoY. Bank of America sees the data-center CPU market expanding from $27 billion (2025) to $60 billion by 2030 on AI agent demand.
Palantir beat on every metric in Q1 — EPS of $0.33 (vs. $0.28 expected), revenue of $1.63 billion (vs. $1.54 billion expected), and net income that quadrupled YoY to $870.5 million. The company raised full-year guidance to $7.65–$7.66 billion (71% growth). Yet shares fell 5.7% after hours as investors questioned whether the sky-high valuation can sustain itself, even as CEO Karp projects the U.S. business will double again in 2027.
Microsoft beat consensus across the board — revenue $82.9B vs. $81.4B, EPS $4.27 vs. $4.07 — yet the stock fell ~4% after guiding $190 billion in 2026 capex, $35 billion above analyst expectations. Azure grew 40% in constant currency (fifth straight quarter of acceleration) and AI annual revenue run rate hit $37 billion (+123% YoY). Shares remain under pressure as investors weigh ROI on the massive spend. Cash dividend of $0.91 goes ex-dividend May 21.
DigitalOcean is the year's biggest AI percentage gainer, surging 240% in 2026 after pivoting to an "AI-Native Cloud" platform. Q1 EPS of $0.44 beat estimates by 69%, revenue grew 22% YoY to $258 million, and AI customer ARR soared 221% to $170 million. The stock popped 48% on the earnings beat. Most analysts still see upside, with a median PT of $177 vs. the current $164 price.
Bernstein upgraded ASML to Outperform and named it the top European semiconductor stock for 2026, raising its price target to €1,300 from €800 (~32% upside). Analyst David Dai cited a massive DRAM upcycle, with the three largest DRAM manufacturers adding up to 250,000 wafers/month of greenfield capacity. The firm sees 18% CAGR earnings growth through 2027, above the 15% consensus.
Adobe is under mounting analyst pressure. Goldman Sachs assumed coverage with a Sell rating and $290 price target (later cut to $220), while BMO downgraded to Market Perform with a $375 target, citing "no clear catalyst" and rising competition from AI-powered creative tools like Canva. Jefferies also downgraded. The triple whammy reflects growing Wall Street concern that AI disruption could erode Adobe's Creative Cloud moat.
Bloomberg reported Monday that "AI mania" is making old-school industrial stocks behave like chip stocks, as investor optimism around AI infrastructure broadens well beyond semiconductors. Some AI-adjacent names have rallied 70%+ in a single month. The S&P 500 closed at 7,412.84 (+0.2%), the Dow hit 49,704.47, and the Nasdaq reached 26,274.13. Analysts warn that overbought conditions across the sector echo the late-1990s — a signal to stay sharp, not necessarily to panic.
