Japan’s Skytree Tower is one of the many buildings built to withstand the country’s earthquakes. REUTERS/Kyodo
The Japanese leading index Nikkei 225 has reached a record level for the first time in 34 years.
The rally has been fueled by the AI boom, with chip stocks helping the index rise 17 percent this year.
The craze for artificial intelligence has helped the country’s stock market emerge from the general economic malaise.
This is a machine translation of an article from our US colleagues at Business Insider. It was automatically translated and checked by a real editor.
The enthusiasm for artificial intelligence has also reached the Japanese stock market. On Thursday, the Nikkei 225 climbed to a record high, surpassing levels last seen in 1989.
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The rally was led by a number of chip stocks linked to the AI boom. These include Tokyo Electron, a manufacturer of semiconductor production systems, and Advantest, a manufacturer of chip test systems and supplier to Nvidia.
The move pushed the Nikkei 225 to 39,099 points. This level had not been reached since the collapse of the Japanese asset bubble in the 1990s. The recent boom has circumvented the sluggishness of the Japanese economy, which is currently in recession. The GDP data for the fourth quarter showed the economy contracted by 0.4 percent.
But the AI explosion has overcome the economic slump and helped catapult the country’s stock market. The Nikkei 225 is up 17 percent so far this year.
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The weak yen has also provided a tailwind for stocks by making stocks look cheap. It can also drive up profits for companies that sell their goods abroad.
Added to this is the political background of the AI boom, which has favored the Nikkei. The USA and Japan are still close allies. At the same time, relations between the US and China have deteriorated, creating an opportunity for Japanese chipmakers to benefit from the AI boom.
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Meanwhile, China’s increasing demand for chips has allowed Japanese companies to fill the chip supply vacuum despite US warnings.
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