The stock rally powered ahead as Nvidia Corp.’s bullish outlook rekindled the artificial-intelligence mania and data showed the world’s largest economy is still going strong.

From the U.S. to Europe and Japan, equities hit all-time highs, with the most-valuable chipmaker up 16 per cent Thursday and adding US$277 billion to its market capitalization. That’s the biggest single-session increase in value ever — eclipsing a $197 billion gain made by Meta Platforms Inc. With the numbers now in, bulls are calculating Nvidia’s new price-to-earnings ratio, or how much investors are paying for future growth. Put another way, the company’s profits have been growing faster than its shares.

“Nvidia got to where it is because of extremely strong earnings and revenue,” said James Demmert, chief investment officer at Main Street Research. “When a company posts 265 per cent year-over-year revenue growth — like Nvidia did — it deserves a premium valuation.”

The MSCI ACWI Index of both developed and emerging-market shares rose to its highest level ever. The Nasdaq 100 added 3 per cent, while the S&P 500 saw its biggest gain since January 2023. The $16 billion VanEck Semiconductor ETF (SMH) jumped 6.8 per cent. Advanced Micro Devices Inc. and Broadcom Inc. — two other chipmakers expected to benefit from AI growth — rallied to records. Super Micro Computer Inc., which has become a darling for investors wanting exposure to the revolutionary technology, soared 33 per cent.

Equities were also buoyed by solid manufacturing, housing and labor-market data, with traders taking more hawkish Fedspeak in stride. Treasury 10-year yields were little changed at 4.32 per cent.

“Few things are more certain than death, taxes, and Nvidia beats on earnings,” said Ryan Detrick at Carson Group. “The bar was set quite high, and incredibly they’ve once again stepped up and hit a home run.”

Nvidia’s market capitalization has now increased by more than $700 billion this year — with its valuation now topping $1.9 trillion — as investors bet that the company will remain the prime beneficiary of an AI computing boom.

Companies such as Amazon.com Inc., Meta Platforms, Microsoft Corp. and Alphabet Inc.’s Google are Nvidia’s largest customers — accounting for nearly 40 per cent of its revenue, — as they rush to invest in hardware for AI computing.

“Demand for AI is surging worldwide across companies, industries and nations,” said Tom Hulick at Strategy Asset Managers. “We own NVDA and continue to hold the company. This is an exciting momentum play that we have been promoting and participating with for a few years now.”

Demmert at Main Street Research says that for investors who already own Nvidia, the recommendation would be to hold the stock and avoid selling in order to capture future expected growth “as we are still early in this transformative AI technology.”

“For investors who don’t own the stock, we would be buying on any weakness,” he noted. “With Nvidia’s stock, there will be corrections and bumps along the way, but the stock will continue to climb the wall of worry.”

Nvidia’s results come as a relief for AI bulls, as expectations have improved significantly, according to Solita Marcelli at UBS Global Wealth Management. Despite the industry surge, she sees potential for further gains in technology shares — especially those that would benefit from the AI revolution.

“We think the near-term momentum in AI-related stocks is likely to continue,” Marcelli noted. “To position, we maintain our preference for semiconductors and software, and see opportunities in beneficiaries of AI edge computing, big tech, and their partners.”

Nvidia’s blockbuster results also underscored the tech dominance over the rest of the stock market, with the “Magnificent Seven” group of megacaps leading gains.

To Chris Senyek at Wolfe Research, US equities are poised to power ahead over the next two to three weeks — with the AI-leveraged names, most of the “Mag 7,” and momentum themes driving the gains.

Other stock-market industries are not rallying as strongly as the tech sector.

“We still believe it is going to be important for the stock market to broaden out a lot more than it has this year if it’s going move a lot more than it already has so far this year,” said Matt Maley at Miller Tabak + Co. “What we’re trying to say is that although the tech sector is the most important one for the stock market right now, there are still plenty of opportunities in other sectors in the marketplace.”

The tech rally has propelled the valuation of the Nasdaq 100 to an elevated level versus history, with a similar picture for the S&P 500. Lofty valuations could ultimately curb more gains as investors weigh how much they’re willing to pay for stocks valued on future growth.

Still, Citigroup Inc. strategist Scott Chronert said recently that index price-to-earnings readings could be misleading because 40 per cent of the S&P 500 trades off other metrics. He predicted that more stocks could re-rate even with the US benchmark trading at 20 times forward earnings — which is exactly what followed.

Meantime, demand for options protecting against a short-term pullback in the Nasdaq 100 is easing after nearing the highest level in months before Nvidia’s earnings report.

The implied volatility premium for one-month puts over calls — known as the skew — on the Invesco QQQ Trust Series 1 ETF had increased to about 3.5 points this week, a level last seen for any length of time back in November. The concerns were focused in the market for short-term options, with the difference between one-month and three-month skews reaching the narrowest level since April 2022 before widening back out.

Corporate highlights:

• AT&T Inc. said its mobile network has been restored after a widespread, hours-long outage Thursday as the FBI and U.S. Department of Homeland Security began investigating why hundreds of thousands of wireless subscribers lost service.
• Reddit Inc. filed for an initial public offering, confirming its revenue growth and helping to propel a still tenuous resurgence in US listings.
• AbbVie Inc. is selling around $15 billion of bonds in the US investment-grade market on Thursday to help fund its acquisitions of ImmunoGen Inc. and Cerevel Therapeutics Holdings Inc., adding to a recent rush of buyout financings.
• Space exploration startup Intuitive Machines Inc. will attempt on Thursday to put the first intact, U.S.-made lander on the moon in more than 50 years.
• Rivian Automotive Inc., an electric-vehicle maker, issued a disappointing production forecast and announced another round of job cuts.
• Moderna Inc. reported fourth-quarter revenue that beat analysts’ expectations by gaining Covid vaccine market share on its rival, Pfizer Inc.
• Newmont Corp., the world’s top gold producer, will sell six mines and two projects in a set of divestitures aimed at generating $2 billion in cash.
• Grab Holdings Ltd., a ride-hailing company, forecast 2024 revenue below analysts’ estimates, suggesting a deeper-than-anticipated slowdown in its core online business.

Key events this week:

• China property prices, Friday
• Germany IFO business climate, GDP, Friday
• ECB publishes 1- and 3-Year inflation expectations survey, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 2.1 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 3 per cent
• The Dow Jones Industrial Average rose 1.2 per cent
• The MSCI World index rose 1.7 per cent

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0821
• The British pound rose 0.2 per cent to $1.2661
• The Japanese yen fell 0.1 per cent to 150.51 per dollar

Cryptocurrencies

• Bitcoin rose 1.1 per cent to $51,928.73
• Ether rose 2.8 per cent to $3,009.41

Bonds

• The yield on 10-year Treasuries was little changed at 4.32 per cent
• Germany’s 10-year yield declined one basis point to 2.44 per cent
• Britain’s 10-year yield was little changed at 4.11 per cent

Commodities

• West Texas Intermediate crude rose 0.7 per cent to $78.44 a barrel
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.