After Nvidia's impressive earnings allayed worries about the artificial intelligence industry's valuation, Japan's Nikkei share average increased on Thursday, ending a four day slump.
The Nikkei 225 Index lost some of its momentum in the afternoon after momentarily rising above the crucial psychological 50,000 mark. While the overall Topix increased by 1.7%, the gauge ended the day up 2.7% at 49,823.94.
AI darling Nvidia predicted quarterly sales significantly higher than analysts projections following the New York bell. To ascertain whether billions of dollars spent on expanding AI infrastructure have created an AI bubble, global markets have looked to the chip designer.
Before a break earlier this month, the Nikkei measure reached all time highs thanks in large part to Japanese suppliers and investors in the AI industry.
According to Maki Sawada, a strategist at Nomura Securities, "there was heightened focus on whether AI related profitability would justify massive infrastructure investments prior to Nvidia's results."
"Companies that had seen selling on profit-taking are now being bought back, leading to a sharp rebound in the Nikkei." The Nikkei index saw 186 gains and 38 decreases. Tokyo Electron and Advantest, two major players in the AI sector, were the main drivers of the index's growth.
Fujikura, a significant provider of cables and wire to data centers, saw a 5.9% increase. Following the insurer's announcement of a buyback of 77 billion yen ($490 million) of its own shares, Sompo Holdings stock increased 10.5%.
Tokyo Electric Power, which wants to rebuild its Kashiwazaki Kariwa nuclear facility, was one of the largest decliners, losing about 4% after the Asahi newspaper revealed that the firm had improperly handled confidential documents.
