The stocks that tend to move with Nvidia earnings, and the ones that don't

Nvidia is set to report fiscal Q2 results Wednesday after the bell, with Wall Street targeting adjusted EPS of $2.10 and revenue of $92.18B (both nearly double year-ago levels). Options markets imply about a 5% stock move in either direction. Nvidia’s earnings have historically acted as a read-through for AI chip/data-center infrastructure names (e.g., AMD correlation 0.75; nearly 70% same-direction days), while some defensive/value stocks have moved in the opposite direction (e.g., McDonald’s same-direction rate 17%).

Analysis

This setup is less about NVDA’s standalone earnings and more about whether the AI capex complex still has broad sponsorship. The highest-probability spillover is to the suppliers with the cleanest beta to hyperscale demand — AMD, AVGO, MPWR, ONTO, and the design-tool names — because the market will treat any guide-up or guide-down as a read-through on the next leg of AI spending, not just one quarter of results. Vertiv-linked infrastructure names would also be vulnerable to a disappointment even if their own demand is intact, since the street will quickly reprice the pace of data-center buildout.

The inverse basket matters for portfolio construction: when growth leadership narrows, money typically rotates into defensives and yield, which is why MCD, PFE, JNJ, PM, and NEM can outperform even without any company-specific news. That makes the event a short-horizon factor trade more than a fundamental one; the first 24 hours should be dominated by positioning and dealer hedging, while the next 1-3 months will hinge on whether NVDA’s guidance confirms a durable AI demand cycle or simply extends an already crowded trade.

The consensus risk is assuming symmetry around a beat. If NVDA clears estimates but softens the forward commentary, high-beta semis can still sell off because investors are paying for acceleration, not just absolute growth. Conversely, if the print is merely in-line but the company reiterates a tight supply/demand balance and strong visibility, the move may be underdone because crowded defensive hedges could unwind into month-end.

What would falsify the bearish read on the sympathy basket is a post-print setup where hyperscaler capex commentary remains firm and the market ignores near-term NVDA volatility. What would falsify the defensive rotation trade is a sharp downside NVDA move with no corresponding follow-through in semis after 1-2 sessions, implying the market views the miss as idiosyncratic rather than a sector signal.

Key Decisions for Investors

• Event-driven pair: long AMD / short MCD into the print, targeting a 3-5% relative move if NVDA confirms AI demand; stop if NVDA gaps and stays above the implied move while AMD underreacts.
• Secondary expression: long AVGO or SNPS on any post-print weakness if NVDA guide is strong, using the first session flush as entry; thesis is 1-3 month sympathy catch-up rather than same-day momentum.
• If NVDA misses or guides conservatively, short ONTO or MPWR against a basket of defensives (JNJ/PFE/PM) for a 1-2 week rotation trade; these names are most exposed to AI spend sentiment compression.
• For hedging, buy near-dated NVDA straddles only if realized volatility has been persistently below implied; otherwise use stock pairs because the 5% implied move is already expensive and decay is high.
• Watch-list alert: if NVDA beats but MCD/PFE/PM rally sharply anyway, the market is signaling a broad risk-off rotation rather than a semiconductor-specific reset, which would weaken sympathy longs across AMD/AVGO/CDNS/SNPS.