TOKYO, June 26 (Reuters) - Japan's record-breaking Nikkei rally is no longer about AI — it's about who's left to buy.
While AI euphoria is lifting shares around the world, the 37% gain in Japan's benchmark Nikkei index has far outpaced major indexes in the United States, Europe and China.
The first AI wave in Japan was driven by now-familiar names like SoftBank Group, Advantest and Tokyo Electron. A second leg brought in suppliers including fibre-optic cable makers Fujikura and Furukawa Electric. Now a third wave is spreading in the components and power infrastructure that data centres cannot run without.
Murata Manufacturing and Taiyo Yuden, leading makers of multi-layer ceramic capacitors (MLCCs) used to regulate power in AI servers, have emerged as the latest engines of the index's advance.
Shares of Murata have risen 268% so far this year. Taiyo Yuden has surged 438%, trailing only memory maker Kioxia, which overtook Toyota Motor this month to become Japan's most valuable company, in gains on the Nikkei.
"This is just the beginning of their rally. Investors will continue to hunt stocks that are related to AI data centres," said Kazuaki Shimada, chief strategist at IwaiCosmo Securities.
Ibiden, a supplier to AI bellwether Nvidia, is another high-flyer, up 292%. The latest joiner is Panasonic Holdings, whose shares hit a record high this month after the company announced a plan to mass produce battery cells for data centres at its factory in the U.S. state of Kansas.
Chip-related names such as Tokyo Electron, Advantest and Kioxia account for about 25% of the Nikkei's value, according to Takamasa Ikeda, senior portfolio manager at GCI Asset Management. Together with companies like Murata, Sony Group and Kyocera, that weighting goes up to 35%.
That concentration carries risk. The Philadelphia semiconductor index, a benchmark for U.S. tech shares, traded at more than 70% above its 200-day average as of last week, a sign of overheating.
"It might be hard for the SOX index to maintain its current momentum in the mid-to-long term," Ikeda said. "And if there's a correction in the SOX, the same fate will be inevitable for the Nikkei."
Reporting by Junko Fujita; Editing by Rocky Swift and Christopher Cushing
Source: Reuters