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

By Anjana Jayakrishnan Nair, Johann M Cherian and Avinash P

Nov 11 (Reuters) - European shares notched a record close on Wednesday 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 .STOXX gained 0.72% to 663.05 points at the close, putting it a whisker away from surpassing the intraday record high of 663.41.

Germany's DAX .GDAXI outperformed regional peers and was also hovering near an all-time high, up 1.2%, with Siemens Energy ENR1n.DE leading gains.

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

Shares of its peers Schneider Electric SCHN.PA and Legrand LEGD.PA gained 3% and 2.2%, respectively, while the broader tech sector .SX8P added 2.5%.

Optimism around AI was especially boosted by neocloud company CoreWeave <CRWV.O>, 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.

The sentiment also trickled down to other chip stocks, including Soitec SOIT.PA and Aixtron AIXGn.DE, which jumped 11.9% and 8% 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.

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 .SXRP, and food and beverage .SX3P among the major laggards.

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

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.