May 18 (Reuters) - Shares in Nvdia Corp, Advanced Micro Devices and Micron Technology on Thursday provided the biggest boosts to the chip sector, which outperformed the broader market as investors looked for ways to invest in artificial intelligence and in Japan. Shares in chip design software company Synopsys shares ended up 8.7% after it forecast better-than-expected third-quarter profit estimates, saying increased use of AI and automation boosted its business.

Nvidia shares were up 5.0%, while the Philadelphia semiconductor index gained 3.2%. Micron's shares climbed 4.1% after announcing it would invest up to 500 billion yen ($3.70 billion) in extreme ultraviolet (EUV) technology in Japan in the next few years with Japanese government support.

Japan's President Fumio Kishida asked executives from companies, such as Micron, Intel Corp and Taiwan Semiconductor tante sange (TSMC), to invest in Japan ahead of a three-day Group of Seven (G7) summit in Hiroshima, where member countries will discuss what they see as China's economically coercive policies and its accumulation of sensitive technology. Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh put Thursday's rally down to continued investor interest in the emergence of artificial intelligence as the hottest new technology, more so than the news from Japan. "While it's encouraging that companies and countries are working together to expand capacity, for investors when companies are building new plants, it's generally not rewarding in the short term because that's where all the free cash flow goes," said Forrest.

The money manager, who also cited Synopsys results as a positive sign for the chip sector, however, noted that investors see chips as the part of the AI story they can buy into today as "there's no one company you can buy that's the lynchpin" for AI.

AMD shares were up 4.0% while Intel added 2.8%. Nvidia, which is up 116% so far in 2023, is due to report quarterly results on May 24.

Nvidia shares hit highest level since December 2021 while Micron shares touched highest point since June 2022.

Trailing behind the chip sector, the S&P 500 technology index was up 2.1% and the S&P 500 growth index rose at a slower 1.0% pace. (Reporting By Sinéad Carew Editing by Marguerita Choy)