Japan's Nikkei share average topped 67,000 for the first time on Monday, powered by AI-related stocks, as startup investor SoftBank Group overtook Toyota Motor to become the country's most valuable company.
The Nikkei climbed as much as 1.4% to touch a record 67,231.28 before ending the day with a 0.9% gain at 66,934.33.
SoftBank was by far the biggest support for the Nikkei, jumping 14% to contribute 845 points to the rally, more than the index's net total 605-point rise.
The company's market capitalisation swelled to around 48.8 trillion yen ($306.0 billion) while Toyota's shrank to around 45.9 trillion yen after the stock slid 4.5% on Monday. Over the weekend, SoftBank pledged some €75 billion ($87.3 billion) over five years to build up AI infrastructure in France.
The split between tech shares and the rest of the market was clear from the performance of the broader Topix, which sagged 0.4%.
"Despite concentration risks and rising volatility, the AI theme continues to be underpinned by strong earnings," strategists at Jefferies wrote in a research report.
"This rally is fundamentally driven, and the message is clear: follow the earnings momentum." Both the Nikkei and Topix notched all-time highs on Friday on optimism over a near-term peace deal in the Middle East, but the fresh week began with Washington and Tehran still appearing to differ on significant issues.
"Uncertainty regarding the situation in the Middle East seems to be intensifying," and that is weighing on the broad market because "we're in a situation where concerns about overvaluation are deep-rooted," said Maki Sawada, a strategist at Nomura Securities.
At the same time, "given the current expectations for expanding demand for AI servers, buying interest is spreading to AI-related stocks that had been lagging behind," such as electronic component maker Murata Manufacturing, whose shares jumped 9%, she said.
Among the Tokyo Stock Exchange's 33 industry groups, seven rose, led by a 5.6% jump in IT firms. Auto shares were among the worst performers, down 3.8%.
Even in the Nikkei, only 70 of its 225 components rose, versus 155 that fell.
Not all chip-related shares advanced, with Advantest retreating 1.9% and Fujikura down 2%.
($1 = €0.8588)
($1 = 159.4800 yen)
