SAN FRANCISCO (Reuters) - Shares of chipmakers slumped on Thursday ahead of a quarterly earnings report from Nvidia Corp NVDA.O, the star performer of the high-flying sector over the past year.

The logo of Nvidia Corporation is seen during the annual Computex computer exhibition in Taipei, Taiwan May 30, 2017. REUTERS/Tyrone Siu

The Philadelphia Semiconductor index .SOX dropped 2.96 percent and was on track for its steepest one-day decline since June, with all 29 of its components in negative territory.

The broader stock market also fell, with the benchmark S&P 500 .SPX down 1 percent amid investor concerns that Republican lawmakers may not be able to pull off promised cuts to corporate taxes.

Semiconductor companies have spearheaded the rally in technology stocks this year. With the chip index up more than 40 percent in 2017 and the year-end in sight, many portfolio managers are reluctant to give up gains.

“There’s really no reason to be overly hitting the panic button like this,” said Wedbush trader Joel Kulina. “But a lot of people had a terrible 2016, so investors have a mind frame that they’ve got to preserve their very healthy year-to-date gains.”

Citi on Thursday said in a report it remained positive on the sector, with top picks including Texas Instruments TXN.O and Applied Materials AMAT.O.

But Citi analyst Christopher Danely also cautioned investors to be vigilant amid warning signs, including potential declines in order lead times or demand from semiconductor customers.

Graphics chip specialist Nvidia NVDA.O, a Wall Street favorite in recent years, fell 3.50 percent ahead of its quarterly report after the bell, while rival Advanced Micro Devices AMD.O dropped 5.03 percent.

Investors sold both of those stocks after Intel INTC.O on Wednesday said it hired Raja Koduri, a chief architect from AMD's graphics team, in a push to expand its own offering of graphics chips.

Analysts, on average, expect Nvidia to post an 18-percent increase in revenue for the quarter through October as it expands further into data centers demand for its chips from cryptocurrency miners.

Nvidia’s stock has nearly tripled over the past 12 months, making it the top performer in the semiconductor index and the S&P 500.

Nvidia options activity implied traders expect a 7.7-percent swing in either direction for the stock by Friday, according to Trade Alert data. Options trading sentiment was leaning slightly toward defensive bets on the stock.

Broadcom AVGO.O, which on Monday made an unsolicited $103 billion bid for Qualcomm Inc QCOM.O, fell 3.1 percent. Qualcomm was down 1.63 percent.

(This version of story has been refiled to fix typo in word “from” in lead paragraph)