The Nikkei average rose 256 points to 58,134 on the 15th, extending its winning streak. Upon approaching its all-time high, the index faced profit-taking pressure but managed to finish above the 58,000 level. U.S. President Trump told American media that peace negotiations with Iran could resume in Pakistan within two days, a development that reportedly buoyed investor sentiment. However, market skepticism remains over whether the market will genuinely respond to such news, as Middle Eastern developments have increasingly been priced in. Market participants are now prioritizing U.S. and Japanese long-term yields as a barometer that aggregates all market catalysts.

While the Nikkei hovers at elevated levels, stock picking has become concentrated on specific names. Funds are tracing U.S. market trends, with a particularly strong appetite for the semiconductor sector. Within semiconductors, interest is focused on AI-related companies, specifically those tied to AI data centers. A market participant noted: "While overinvestment concerns persist, U.S. Big Tech companies view pausing AI data center investment as forfeiting future dominance. They cannot afford to slow down." In this current phase of AI investment, a "safety in numbers" mentality prevails where risks are ignored as long as the crowd follows suit. The Philadelphia Semiconductor Index (SOX), trading at record highs, appears driven by conviction in a returning semiconductor super-cycle.

Under these conditions, attention to the Tokyo semiconductor sector has naturally increased, inheriting the U.S. trend. However, investors remain cautious about chasing major stocks at high prices, as a fundamentals-based approach offers little reason for rushed buying. Consequently, Advantest Corp <6857>, which holds the highest weighting in the Nikkei average, serves as a key indicator.

Advantest’s share price showed an island reversal with a large bearish candlestick on January 29, and after a decline, it recovered with remarkable strength to hit an all-time high of 29,345 yen on February 26. While it subsequently formed a double top, the stock recently staged a major comeback, rising as much as 1,610 yen to 28,610 yen today, within approximately 700 yen of its peak. Although it did not break into "blue-sky" territory today, clearing the late February high in the near future would signal a new upward stage for the semiconductor bull market.

Within the AI data center theme, rotational stock picking is emerging. Kioxia Holdings, previously sensitive to smartphone demand, saw its perception shift dramatically due to special demand for SSDs in AI servers. This year’s Kioxia rally has been entirely driven by the AI data center theme. This momentum has spilled over into optical fibers, connectors, and measuring instruments, sparking bull markets for the three major cable companies as well as Seikoh Giken Co Ltd <6834> and Santec Holdings Corp <6777>.

The surge in capacitor-related stocks such as Murata Manufacturing Co Ltd <6981> and Nippon Chemi-con Corp <6997> is also predicated on AI data center demand. Momentum remains strong in this segment, and near-term dips are likely being viewed as accumulation opportunities. Among mid- to low-priced issues, Nikkato Corp <5367> is seeing demand for zirconia balls used in AI servers. The stock is currently testing its 75-day moving average as a launchpad for further gains. Additionally, NF Holdings Corp <6864> warrants attention as a potential dark horse in the AI data center space. While often categorized under quantum computing, the company has significant potential in power supply evaluation and measurement systems for next-generation data centers. Beyond these, Hibiya Engineering Ltd <1982> and Shin Nippon Air Technologies Co Ltd <1952> also warrant renewed attention for their roles in data center air conditioning.

On tomorrow's schedule, the Ministry of Finance will release weekly portfolio flows before the market open. During the morning session, a 1-year Treasury bill auction will be held. Overseas data includes China's first-quarter real GDP, March new home prices, retail sales, industrial production, fixed asset investment, and real estate development investment. The U.S. will release the April Philadelphia Fed Manufacturing Index, March industrial production, capacity utilization, and weekly initial jobless claims. The G20 Finance Ministers and Central Bank Governors Meeting will also be held. Market attention is particularly high on January-March earnings from Taiwan Semiconductor Manufacturing Company Ltd and Netflix Inc .

Source: MINKABU PRESS

*Translated by generative AI. Click here for the original article.