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

Japan’s main stock index and European shares have hit a record high as strong results from the chipmaker Nvidia stoked investor exuberance over an artificial intelligence investment boom.

The Nikkei rose 2.19% to end the day at 39,098.68. 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.

On Thursday morning, Europe’s Stoxx 600 index reached a fresh high of 495.77 points, surpassing the 495.46 reached in January 2022.

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 – as well as benefiting from investor concerns about the Chinese economy.

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

Nvidia shares climbed 12% in pre-market trading on Thursday as booming demand for its AI chips – a key piece of infrastructure for companies building and operating AI tools – helped the company forecast quarterly revenue much above Wall Street’s already high expectations, lifting AI and tech stocks globally.

Takeo Kamai, the head of execution services at CLSA Securities in Tokyo, said there was a mood of “euphoria and surprise” on the trading floor, the FT reported.

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

“This was a ‘gamechanging 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 Thursday the AI market had hit “the tipping point”. He added: “Demand is surging worldwide across companies, industries and nations.”

Based on pre-market trades, the New York-listed company was poised to add more than $230bn (£181bn) to its market value, taking it closer to $2tn for the first time and reclaiming its spot as Wall Street’s third-most valuable company.

Gains in Nvidia lifted its AI competitor Advanced Micro Devices by 5.7%, while Super Micro Computer climbed 14.4% and the UK-based Arm Holdings rose 9.5%. The iShares semiconductor ETF added 4.3%.

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.

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.