Japan’s primary stock index and European equities have reached an all-time high following robust performance by chipmaker Nvidia, fueling investor enthusiasm for the artificial intelligence investment surge.
The Nikkei surged by 2.19% to close at 39,098.68, surpassing the 38,915.87 mark on the last trading day of 1989. It took the Nikkei 34 years to recover, a decade longer than Wall Street’s rebound from the 1929 crash and the Great Depression.
Europe’s Stoxx 600 index hit a new peak of 495.77 points on Thursday morning, exceeding the previous high of 495.46 set in January 2022.
The record-breaking results from Nvidia and the positive outlook on tech stocks contributed to the Nikkei’s historic rise. Other factors supporting the Tokyo index in recent years include optimism regarding Japan’s progress in addressing longstanding issues with stagnant or declining prices, along with investor apprehensions about the Chinese economy. The depreciation of the yen has also enticed foreign investors to the Nikkei.
Nvidia’s shares surged by 12% in pre-market trading on Thursday, driven by the soaring demand for its AI chips, essential for companies developing and utilizing AI tools. The company’s forecasted quarterly revenue significantly exceeded Wall Street’s already high expectations, propelling AI and tech stocks globally.
Takeo Kamai, the head of execution services at CLSA Securities in Tokyo, noted a sense of “euphoria and surprise” on the trading floor, as reported by the FT.
Nvidia’s performance was hailed as a pivotal moment for the market and the tech sector by analysts, with Dan Ives from Wedbush Securities describing it as a “gamechanging moment” that energizes the tech bull market thesis.
Jensen Huang, Nvidia’s CEO, declared that the AI market had reached “the tipping point,” emphasizing the surging demand across companies, industries, and nations.
Nvidia’s market value was poised to increase by over \(230 billion, potentially nearing \)2 trillion for the first time and reclaiming its position as the third most valuable company on Wall Street.
The positive momentum in Nvidia’s stock also uplifted its AI rival Advanced Micro Devices by 5.7%, while Super Micro Computer and Arm Holdings saw increases of 14.4% and 9.5%, respectively. The iShares semiconductor ETF rose by 4.3%.
The escalating demand for Nvidia’s chips, sought after by companies racing to enhance their AI capabilities, led the company to project a 233% revenue growth in the first quarter, surpassing Wall Street’s expectations of 208%.
Josh Gilbert, a market analyst at eToro, highlighted Nvidia’s consistent performance and growth prospects, emphasizing the company’s substantial cash generation.
Nvidia’s shares had surged by nearly 36% this year, making it the top-performing S&P 500 stock, with concerns arising that any disappointment in Nvidia’s growth, as a key indicator for AI demand, could disrupt the market rally fueled by the stock’s ascent to record highs.
