Two Stocks Are Quietly Beating Nvidia, and Wall Street Wants Them 30% Higher
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. Yet historical past carries a warning. The inventory has dropped the day after earnings six instances since August 2024, and every time its personal chipmaker, Taiwan Semiconductor (TSM), took the hit higher.
Analysts now price TSMC a Strong Buy with about 27% upside. And a second provider, Ciena (CIEN), has outrun Nvidia sixteen instances over this previous yr. Here is why the sample might repeat, and who wins if it does.
Why Nvidia Stock Could Fall Again on August 26
February 26, 2026 exhibits 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?
Investors fixated on two issues the beat couldn’t repair. Nvidia was incomes barely much less on every sale, and its China outlook had been reduce to zero.
However, those self same pressures are again, and the bar now sits increased. Nvidia has promised about $91 billion in income, however Bank of America expects $94 to $95 billion. Anything quick of a giant beat now counts as a letdown.
Meanwhile, Nvidia’s latest results promise it’s going to maintain 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 is why Goldman Sachs flags the sell-the-news risk, with the S&P 500 additionally at a record high. When everybody says purchase and the worth assumes a blowout, simply assembly estimates will get offered.
So the place does the cash conceal when Nvidia dips? Six instances in a row, the reply has been the identical.
The Foundry That Absorbed Every Shock
That reply is TSMC. Across all six destructive reactions since August 2024, it fell simply 1.76% on common towards Nvidia’s 4.34%, based mostly on Nasdaq closing prices. In May 2026, it even rose 1.38%.
The motive is business-centric. TSMC builds chips for Nvidia, AMD, Apple, Broadcom and customized designers, so demand misplaced by one buyer typically returns by way of one other.
The cushion exhibits over time too, with TSMC returning 154% since August 2024 towards Nvidia’s 79%.
Analysts have observed. The TipRanks forecast exhibits a Strong Buy from six Buys and one Hold, 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. Still, TSMC just isn’t the one provider successful.
Ciena Wins the Bigger AI Trade, Not the Earnings Trade
The different winner is Ciena, and its edge sits exterior the earnings sample. The agency sells the optical hyperlinks that transfer information 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 Global information.
The enterprise backs the rally. Revenue grew 40% final quarter, earnings almost quadrupled, and orders worth $7 billion wait to be stuffed.
Still, conviction lags the run. The Ciena forecast exhibits solely a Moderate Buy from ten Buys and 4 Holds. Even so, the typical 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 stocks whose rankings haven’t caught up.
One Theory Connects All Three
Put them facet by facet and the story is diversification towards dependence. Nvidia wants one structure to maintain clearing ever-higher expectations. TSMC collects from each racer, conserving 67.7 cents of every gross sales greenback in gross revenue per its quarterly results, whereas Ciena wires the race itself.
In quick, Nvidia inventory is a wager on a winner. TSMC and Ciena are bets on the race persevering with, which is why they maintain absorbing the shocks Nvidia can’t.
Analyst’s view: The market nonetheless treats Nvidia’s earnings as the general AI verdict. However, the strongest conviction sits elsewhere. If August 26 disappoints, the successful commerce is not going to be shopping for the Nvidia dip. It will likely be proudly owning the corporate Nvidia can’t construct chips with out, its foundry TSMC, with Ciena wiring the race round it.
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