2 AI Chip Stocks I'd Buy Before Their Next Earnings Reports

Broadcom projects $100 billion in custom AI chip sales in fiscal 2027 and is set to deliver on a $21 billion Anthropic/TPU order later this year, while its networking (Ethernet switch) business should benefit as AI clusters scale. AMD is positioned to ramp data‑center CPUs amid reported supply constraints (putting upward price pressure) and has two GPU partnerships with first deployments expected in H2 2026, prompting an expectation of strong guidance at its early‑May earnings. Key monitors for portfolio managers: Broadcom’s ability to sustain semiconductor gross margins on AI ASICs (major catalyst) and near‑term guidance/execution from both companies; these developments could move individual stocks modestly (~1–3%).

Analysis

The market is re-pricing semiconductor exposure around AI infrastructure, but the non-obvious lever is orchestration hardware — increased model complexity drives not only more accelerators but a disproportionate rise in low-latency, high-throughput control-plane CPU demand and higher ASPs for datacenter CPUs. That creates a multi-quarter window where companies with flexible fab/pack capacity and strong system integrations capture both higher revenue per rack and expansionary gross margins as fixed costs are absorbed by larger ASIC runs.

Broad-based foundry and OSAT capacity will be the choke point: firms that can secure TSMC/other node allocation and advanced packaging slots will see order flow stickier, while those without will face either margin compression or forced share losses. This amplifies winners beyond the obvious ASIC designers — OSATs (advanced packaging), substrate suppliers, and network silicon incumbents with end-to-end stacks stand to capture disproportionate incremental profit pools.

Key tail risks are demand volatility and program cadence: a single hyperscaler design delay or a shift to GPU-first system architectures could invert the thesis quickly, producing inventory write-downs within a quarter. Geopolitical export controls or a sudden expansion in lower-cost custom ASIC entrants would compress gross margins and re-rate multiples, turning expected catalysts into headwinds on a 3–12 month horizon.

For positioning, focus on asymmetric payoffs tied to near-term margin prints and foundry allocation signals rather than pure revenue growth. Trades should be sized to capture re-rating events around quarterly guidance and foundry comments, and hedged for a scenario in which hyperscalers delay deployments or force price concessions.

Key Decisions for Investors

• Long AMD equity (target 1.0–1.5% NAV position) over the next 3–6 months to capture upside from improved CPU attach rates; hedge with short-dated (30–60 day) puts at ~5–7% OTM to limit drawdown. Risk/reward: potential 20–40% upside on positive guide vs ~8–10% downside limited by put cost.
• Long Broadcom (AVGO) Jan 9–12 month call spreads (buy near-ATM, sell 20–30% OTM) sized 1.0% NAV to play a margin-proof beat; take profits if semiconductor gross margin expands >150–200bps QoQ. Risk/reward: structured 2–4x upside vs limited premium outlay; cut if company signals ASIC margin dilution.
• Pair trade: long AVGO / short MRVL (equal dollar) for 6–9 months to express leverage to end-to-end networking wins and margin divergence; reduce if Marvell prints >100bps sequential gross-margin expansion. Risk: sector reversal could hurt both; expected asymmetry if Broadcom proves ASIC margins are intact.
• Tactical options: buy AMD 2–3 month call debit spreads (low premium) ahead of the next earnings cycle to capitalize on upside guidance, and separately sell covered calls on AVGO to monetize time decay while holding core exposure. Risk management: close option positions if implied vol climbs >40% or if management commentary signals end-market softness.