World stock markets mostly advanced on Wednesday as fresh evidence of AI chip demand outweighed disappointment over U.S. inflation data. Taiwan led the regional gains, with its benchmark Taiex up 3.6%, while Germany's DAX added 1% after the country's annual inflation rate eased to 2.8% in October, according to the federal statistics office.

What is driving the AI chip demand?

Chipmakers and AI infrastructure companies supplied the momentum. Taiwan Semiconductor Manufacturing Co. rose 3.1% after reporting October revenue nearly six times the year-earlier figure, a sign that orders for AI chips remain strong. CoreWeave, an AI infrastructure firm backed by Nvidia, said it expects to turn profitable in 2028, and its shares jumped 16% in U.S. premarket trading.

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Other moves included:

  • South Korea's Kospi up 2.4%, with Samsung Electronics gaining 3.4% and SK Hynix 5.4%.
  • Japan's Nikkei 225 up 1.3% to 61,248.59.
  • Hong Kong's Hang Seng down 1.1%, while the Shanghai Composite recovered 0.5%.

How are companies placing their bets?

Firms are committing large sums to secure a position in the sector. TSMC's board approved as much as $1 billion in investment in Anthropic and OpenAI, according to a company statement. Anthropic is also moving ahead with its own share sale, which reports value at $1.4 trillion and which would test how much appetite investors still have for AI stocks.

The spending carries costs. SoftBank Group posted a quarterly net loss of 1.1 trillion yen, about $7 billion, tied to heavy outlays on U.S. data center construction. Nvidia, meanwhile, steadied after two sessions of losses that wiped roughly $430 billion from its market value.

Will inflation slow the rally?

Not yet, but it is weighing on bonds. U.S. core consumer prices rose 0.3% in October, above the 0.2% forecast, and the data pushed yields higher. Before the release, Fed Governor Christopher Waller said a 0.3% reading would make him consider a 50-basis-point hike at the December meeting, according to Reuters. Dallas Fed President Lorie Logan said two more increases were needed.

One portfolio manager cautioned that CoreWeave still faces questions about whether it can carry its debt load, even as the results show demand for AI remains strong.

FAQ

Why did bond markets come under pressure?

The inflation surprise raised the chance of tighter Federal Reserve policy, pushing yields up and bond prices down.

What happened to SoftBank?

SoftBank reported a quarterly net loss of about $7 billion, driven by spending on U.S. data centers, and its shares ended 0.4% lower.