Japan Stocks Headed for Best Weekly Rise Since June on AI Gains

Japanese stocks are headed for their best weekly gain in about two months led by a tech rally after US wholesale inflation decelerated, easing concerns about immediate interest-rate increases by the Federal Reserve.

The chip-heavy Nikkei 225 rose 0.9% to 68,920.77 as of 10:48 a.m. Tokyo time, while the broader Topix added 0.8% to 4,207.64, set to extend its record high. Sony Group Corp. contributed the most to the Topix Index gain, increasing 5.1%. Out of 1,637 stocks in the index, 1,135 rose and 425 fell, while 77 were unchanged.

This comes as enthusiasm for AI stocks is returning after the chip selloff in late July over concerns about the sustainability of the AI spending boom. The turnaround in sentiment comes amid expectations of an earnings boost for tech firms as confidence in the AI trade returns.

“A huge amount of hyperscaler money is flowing into hardware,” said Hitoshi Asaoka, chief strategist at Asset Management One. “That is translating into extremely strong sales and profit growth for hardware companies. Investors are returning to the idea of, ‘let’s look at the earnings themselves again.’”

Memory stocks gained in Japan as did those of Asian peers after Sandisk Corp. said it expects revenue growth in the mid-to-high teens over 2028 through 2030, helped by long-term agreements with customers on pricing. Sandisk partner Kioxia Holdings Corp. climbed as much as 8.7%.

Overnight, the S&P 500 gained 0.7% Thursday to close at a record high. The technology-heavy Nasdaq 100 ended 1.15% higher, climbing to the highest level since the end of June, as increased hyperscaler spending plans drive renewed strength across the technology sector.