LGT Navigator

Nvidia earnings validate AI-driven equities rally, help Nikkei to all-time high

Asian stocks shot up on Thursday after Nvidia’s fourth-quarter earnings beat market expectations after the bell in New York on Wednesday. The positive sentiment helped Japan’s Nikkei to set an all-time high, beating its previous record from 1989.

Shane Strowmatt, LGT
Reading time
5 minutes
Computer Chip
© Shutterstock

Nvidia reported fourth-quarter revenue of USD 22.1 billion, beating analysts’ expectations and said it expects sales of USD24 billion this quarter. It also sees excellent conditions for growth next year and beyond. Investors were closely watching Nvidia’s earnings as the company is closely linked to the current topic driving equity market growth - artificial intelligence - as its chips are in high demand by companies developing large artificial intelligence models. Nvidia’s stock surged 9% in after-hour trading. The stock price was already up almost 40% this year.

Tech stocks, particularly semiconductor manufacturers, shot up in after-hour trading after the announcement of Nvidia’s results. Prior to the release of Nvidia’s figures, tech stocks were under pressure, suggesting there may have been considerable room for valuations in the sector to fall, had Nvidia failed to meet market expectations. AMD gained 4% in after-hour trading and ARM - of which Nvidia owns a significant stake - was up nearly 8%.

The 12-month forward price-to-earnings ratio - a valuation measure for stocks - for the S&P 500 tech sector has hit its highest levels since 2002 this year. Underscoring how fragile the valuations of tech stocks are, shares of cybersecurity company Palo Alto fell 28% on Wednesday after the company cut its full-year revenue forecast. Other cybersecurity firms such as SentinelOne (-12%) and Fortinet (-3.8%) dropped as well.

In New York, stocks traded more cautiously ahead of the Nvidia results. The Dow Jones Industrial and the S&P 500 each gained 0.1%. The Nasdaq-100 lost 0.4% on Wednesday.

In the Asia-Pacific region, the mood on stock markets was clearly positive following the Nvidia’s results. In Tokyo, the Nikkei 225 shot up 2.1% to close at 39,116 points, its highest close ever. The previous intraday high was just below 39,000 points, set on the final day of trading in 1989. The almost three and a half decades to recover the losses since the 1989 peak is also a record for a major stock index.

Elsewhere in Asia, South Korea’s Kospi gained 0.4% after the Bank of Korea held its policy rate steady. In Australia, the S&P/ASX 200 made a marginal gain after the Composite Purchasing Managers’ Index (PMI) for February came in at 51.8, meaning a return to growth as the 50-level separates growth from contraction. Hong Kong's Hang Seng Index was trading up 0.8%, while the Shanghai Composite gained 1.1%.

In Europe, the bad news continued for the continent’s largest economy. On Wednesday, German Economy Minister Robert Habeck admitted that his nation is struggling to emerge from a series of recent economic crises and announced a hefty cut to the government’s expected economic growth projections. The German government now expects German gross domestic product (GDP) to grow by 0.2% in 2024, compared with a previous estimate of 1.3%. The slower growth projection is mostly due to slow global economic growth, a weak trade environment and high interest rates. Germany’s GDP shrank by 0.3% over the full year of 2023 and may currently be in its second recession since the end of 2022. Germany’s DAX traded in line with the Euro Stoxx 50 on Wednesday with both indices closing 0.3% higher.

Corporate news in focus: Quarterly figures from Anglo American, AXA, Mercedes-Benz Group, Nestlé, Zurich Insurance.

Economic data in focus: Purchasing Managers’ Indices from several countries throughout the day, including the euro area, France, Germany, UK, US; Italian Consumer Price Index; Turkish central bank interest rate decision; Canadian retail sales; US weekly initial jobless claims.


LGT helps you make informed investment decisions

All about global economic and market trends at a glance

You can also follow us on Facebook or LinkedIn – or visit Insights and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.

Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

Contact us