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Asia’s AI Rally Faces Its Biggest Test
According to Reuters, Asian markets started the day with a clear risk-on bias, extending the rebound from Wall Street as investors leaned back into the AI trade. Regional equities were broadly higher, the U.S. dollar was modestly softer, Treasury yields edged slightly higher, and oil was up around 0.6%, signaling firmer sentiment but still with event-risk underneath it.
The strongest momentum remained in the AI hardware supply chain. Reuters noted that South Korea’s Kospi was up nearly 5% for the week at a record high, taking its 2026 gain to 44%, while Taiwan was also up about 5% for the week and nearly 22% for the year. Japan remained part of the same leadership trade, with the Nikkei up 15% year-to-date, supported by stronger earnings, better governance sentiment, and the possibility that Japanese investors could rotate some capital back from overseas holdings into domestic equities.
The entire setup now hinges on Nvidia’s earnings, which Reuters framed as the key market catalyst for the day. Based on LSEG expectations, the market is looking for quarterly profit growth of 62% and revenue growth of 68%, with first-quarter revenue guidance near $72 billion, up about 64%. The market bar is extremely high: Nvidia has already beaten sales expectations for 13 straight quarters, so investors are focused less on whether it beats and more on how big the beat is.
That is why volatility expectations remain elevated. Reuters reported that options imply a move of roughly ±4.8% in Nvidia shares on the results. Given the company’s enormous size, that translates into roughly $226 billion in market value, underlining how one earnings release could reset sentiment across global tech, semiconductors, and the broader AI narrative in a single session.
On the policy side, markets largely looked through President Trump’s State of the Union remarks, but one detail stood out: his “rate-payer protection pledge,” which Reuters said appeared to imply that major tech companies may be expected to build their own power generation for data centers. The market impact was limited for now, though it adds another layer of uncertainty around the long-term cost structure of AI infrastructure. Reuters also noted that oil briefly dipped when Trump said he would prefer to handle Iran's nuclear issues diplomatically, even though broader geopolitical tensions in the region remain elevated.
What matters next today:
The market’s immediate focus is on Nvidia results, followed by German and French consumer confidence, the final euro zone CPI print, and remarks from officials at the Riksbank, Norges Bank, ECB, and the Fed. In practical terms, today’s tone is simple: if Nvidia clears the very high bar, the AI-led equity rally can extend; if not, the same trade that lifted Asia could quickly turn into another round of sharp, valuation-driven volatility.
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