Nikkei rebounds on US chip gains, tops 66,000 intraday

2026-05-27

In Tokyo trading on the 27th, the Nikkei Stock Average rebounded, ending the morning session 820.53 yen higher from the previous day at 65,816.62 yen. Helped by gains in US semiconductor stocks the previous day, it also briefly topped 66,000 yen during trading for the first time.

Buying continues in AI and chip stocks

The Nikkei widened its gains from the morning and at one point rose more than 1,400 yen. In the US market on the 26th, both the Nasdaq Composite Index and the Philadelphia Semiconductor Index (SOX) hit record highs, drawing buying into Tokyo stocks. The wave of buying in memory shares such as Micron Technology in the US also spread to Japanese stocks.

In Tokyo, Kioxia Holdings, a major memory maker, at one point rose as much as 7.81% and set a new all-time high for the second straight day. Its market capitalisation briefly reached the 36 trillion yen range, and it at one point overtook Mitsubishi UFJ Financial Group for the first time to rank third in the Tokyo Stock Exchange Prime market by market value. Advantest rose 5.71%, Tokyo Electron climbed 5.98% and SCREEN Holdings gained 6.67%, with semiconductor equipment stocks also posting notable gains.

Pricing in expanding AI demand

Markets are being supported by the view that a supercycle centred on AI, in other words a phase of rapid demand expansion, will continue. During the AI training stage, demand for GPUs is swelling, while demand for memory is rising further at present on the back of the spread of inference and agentic AI. NAND for long-term storage and DRAM for short-term storage are both seen as tight in supply and demand, and buying is also returning to CPUs, regarded as the brains of personal computers and servers.

Expanding capital spending by US hyperscalers is also providing a tailwind. Alphabet and Meta raised their 2026 capital expenditure plans alongside the release of their January-March 2026 earnings results. Morgan Stanley in the US lifted its forecast for the 2027 capital expenditure of five companies, Alphabet, Meta, Microsoft, Amazon.com and Oracle, to about $1.11 trillion from about $950 billion.

Related investment also rising in Japan

Against this backdrop, machine orders are also increasing in Japan. The final value of machine tool orders for April announced by the Japan Machine Tool Builders' Association on the 26th rose 45% from a year earlier to 188.9 billion yen. It marked the 10th straight month of year-on-year gains and ranked second in history, after the record 193.4 billion yen in March. Investment related to data centres boosted orders.

Takeshi Kamoshita, head of equity investment at PGIM Japan, said that when the capital spending cycle turns up, economic expansion and stock price gains tend to become larger. He said that as long as the AI-centred supercycle continues, there is significant room for stock prices to rise over the medium term.

Margin buying balances hit a record

Retail investors are also growing more bullish. Outstanding margin purchases as of applications made on the 22nd, announced by the Tokyo Stock Exchange on the 26th, totalled 6.0793 trillion yen across the Tokyo and Nagoya markets, extending to a second straight week the record high since QUICK's data began in December 1994. On expectations of further gains, individual investors are expanding margin buying.

Still, caution over lofty valuations remains strong. On the Tokyo Stock Exchange Prime market, advancing issues numbered 665, only a little over 40% of the total, while declining issues at 843 were more numerous. The Nikkei's gains slowed toward the midday close, and the Tokyo Stock Price Index (TOPIX) briefly slipped into negative territory, albeit only slightly. Kioxia also at one point turned lower.

Tomoichiro Kubota, chief market analyst at Matsui Securities, said investor sentiment is polarised. He said short-term investors seeking to trade for price swings are capturing gains from the rise in AI and chip stocks, while most investors are too scared to buy. At record-high levels, competing market views are likely to create more volatile price moves.

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