Japan’s Nikkei and European shares hit record highs amid AI boom

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Japan’s main stock index, European shares and Wall Street’s blue-chip listings hit all-time highs on Thursday as strong results from the chipmaker Nvidia stoked investor exuberance over a worldwide artificial intelligence investment boom.

The S&P 500 enjoyed its best day in more than a year in New York, rising 2.1% amid a global equities rally. The technology-heavy Nasdaq gained 3%. Both the S&P 500 and the Dow Jones industrial average, which climbed 1.2%, scaled fresh all-time highs. The Nasdaq finished just shy of its own record. Europe’s Stoxx 600 index also reached a record close of 495.10.

Earlier in the day, the Nikkei increased 2.19% to close at 39,098.68 in Tokyo. On the final trading day of 1989, it had closed at 38,915.87. The 34 years it has taken to regain its footing is a decade longer than it took Wall Street to recoup losses from the 1929 crash and Great Depression.

Shares in Nvidia leapt 16.4% as trading started a day after the company reported bullish results. Booming demand for its AI chips – a key piece of infrastructure for companies building and operating AI tools – helped Nvidia post quarterly revenue and future sales guidance much above Wall Street’s already high expectations on Wednesday, lifting tech stocks globally.

The gains meant Nvidia broke the record for the biggest single-day increase in a company’s stock market value, as it added $277bn to be worth more than $1.9tn – just nine months after reaching $1tn.

Although the strong Nvidia results and accompanying optimism about tech stocks helped drive the Nikkei to a record high, the Tokyo index has been bolstered over the past few years by other factors, including hope that Japan is finally overcoming its historical problems with flat or falling prices, and investor concerns about the Chinese economy.

A fall in the value of the yen has also helped to tempt foreign investors to the Nikkei.

One analyst described Nvidia’s results on Wednesday as “the biggest moment for the market and tech sector in many years”.

“This was a ‘game-changing moment’ for the tech bulls and puts jet fuel in the tech bull market thesis,” said Dan Ives, an analyst at the US financial firm Wedbush Securities.

Jensen Huang, the Nvidia chief executive, said on Wednesday the AI market had hit “the tipping point”. He added: “Demand is surging worldwide across companies, industries and nations.”

Gains in Nvidia lifted its AI competitor Advanced Micro Devices by 10.7%, while Super Micro Computer climbed 33% and the UK-based Arm Holdings rose 4%.

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Soaring demand for Nvidia’s chips used by companies rushing to upgrade their AI offerings helped the Silicon Valley company forecast first-quarter revenue growth of 233%, ahead of Wall Street expectations of 208%.

The midpoint of the forecast was $24bn, which was above market expectations of about $22.2bn. Fourth quarter revenues were $22.1bn against an expected $20.6bn – up 265% from a year ago.

Josh Gilbert, a market analyst at eToro, said: “Nvidia continues to deliver in every way, and its results show there is still plenty of growth ahead. This isn’t just a flash in the pan, nor a bubble, but a business that continues to make serious cash.”

Expectations heading into the results were very high, with shares in Nvidia surging nearly 36% this year to become the best-performing S&P 500 stock and notching a record high just last week.

The share rise that fuelled the S&P 500’s climb to record highs this year had prompted fears that growth at Nvidia, seen as the bellwether for AI demand, could disappoint and potentially disrupt the market rally.

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