European shares log record close on Siemens, CoreWeave-fuelled AI optimism

EUROPEAN shares notched a record close on Wednesday (Nov 11) and ended just shy of an intraday record high, as upbeat forecasts from Siemens Energy and US-based CoreWeave bolstered confidence in the AI trade, lifting the technology sector.

The pan-European index gained 0.72 per cent to 663.05 points at the close, putting it a whisker away from surpassing the intraday record high of 663.41.

Germany’s DAX outperformed regional peers and was also hovering near an all-time high, up 1.2 per cent, with Siemens Energy leading gains.

The AI equipment maker jumped 10.8 per cent after raising its expectations for profit margins in 2027 and announcing plans to more than triple its dividend.

Shares of its peers Schneider Electric and Legrand gained 3 per cent and 2.2 per cent, respectively, while the broader tech sector added 2.5 per cent.

Optimism around AI was especially boosted by neocloud company CoreWeave, which said it would become profitable on an adjusted basis in the first half of 2028. The company was at the centre of AI bubble fears that sparked a global market rout last week.

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The sentiment also trickled down to other chip stocks, including Soitec and Aixtron, which jumped 11.9 per cent and 8 per cent respectively.

“The current big uncertainty is will this entire AI investment really be profitable? And not all of the AI companies will be profitable. So in the next two to three months we will be watching what the company representatives are telling us about their business,” said Thomas Romig, chief investment officer, multi-asset at Assenagon.

A solid earnings season so far and Europe’s limited exposure to big AI names have mostly shielded the Stoxx 600 from last week’s rout and have helped its rise to near record levels.

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However, analysts said the rally may have limited room to run.

“We see the rally as somewhat stretched given persistent macro and political risks, European equity fundamentals and technical indicators. With the Stoxx 600 already close to our upside-risk target, we see limited additional upside by year-end,” Societe Generale analysts said in a note.

Sectors less exposed to AI in Europe underperformed on Wednesday, with the Stoxx retail, and food and beverage among the major laggards.

Czech-based ammunition and arms producer CSG tanked 21.6 per cent after cutting its full-year operating margin forecast, weighing on the broader defence sector.

Investors, however, were keeping a close eye on the interest rate outlook, a day after US inflation data came in hotter than expected and hawkish comments from Federal Reserve policymakers reinforced expectations of another rate hike next month.

A rebound in Brent crude prices following shipping attacks in the Strait of Hormuz also added to inflation concerns in energy-importing Europe.

Traders expect at least one quarter-point rate hike by the European Central Bank by February 2027. REUTERS