Japanese Stocks Soar After Nvidia Earnings Ease AI Panic
Japanese stocks rallied sharply on Thursday, snapping a four-day downtrend, after Nvidia's strong earnings report revived interest in artificial intelligence (AI) stocks. The Nikkei 225 index briefly rose as much as 3.7% to around 50,343.25, its biggest daily gain since early October. The broader Topix index also rallied as much as 2.3% early in the Tokyo session.
The technology sector was the main driver of the rally. SoftBank Group shares briefly jumped more than 9%, while chip equipment manufacturers Tokyo Electron and Ibiden each rose more than 7%. This rise followed a more than 4% surge in Nvidia shares in after-market trading after the company released its January quarter earnings forecast that far exceeded market expectations.
Takashi Ito, Senior Strategist at Nomura Securities, called Nvidia's results "almost flawless" and highly welcomed by investors. He believes the report has the potential to trigger a strong rebound in the Japanese stock market, which had previously been weighed down by concerns about an AI spending bubble. These results also eased fears that investment in the AI sector would slow in the near future.
Prior to Nvidia's earnings release, technology stocks were among the biggest drags on the Japanese stock market, as a global correction was triggered by concerns about overvaluation. Now, Nvidia's report signals that "the pace of AI spending is not a problem for now," allowing some of the pressure in the tech sector to ease.
However, the risks for Japanese stocks have not completely disappeared. Investors are still awaiting details of the economic stimulus package that Prime Minister Sanae Takaichi will announce on Friday. Japanese government bond yields have risen to their highest levels in decades, while the yen has weakened again to around 157 per dollar. Furthermore, diplomatic tensions between Tokyo and Beijing remain an additional risk factor keeping market participants cautious. (asd)
Source: Bloomberg.com
