Nikkei Climbs 1.1% as Chip Stocks Lead Gains, AI Investment Boom Lifts Market Sentiment

Japan's stock market closed higher on Wednesday (October 28), with chip and artificial intelligence (AI) related shares leading the advance.

The Nikkei 225 Index rose 1.1% to close at 63,954.19 points.

Overnight strength in US technology stocks, combined with strong earnings from South Korean chip giant SK Hynix, bolstered investor confidence in the global semiconductor industry's growth prospects.

On the previous trading day, the Philadelphia Semiconductor Index surged 3.6%, driving strength in Tokyo's semiconductor sector.

Among individual stocks, chip-related companies including Kioxia Holdings, Advantest, Tokyo Electron, Disco, and Lasertec attracted buying interest, while AI-themed stocks such as SoftBank Group also performed strongly.

In contrast, insurance, food, and some gaming stocks showed weakness, indicating that market buying was concentrated mainly in the technology sector.

South Korean company SK Hynix reported quarterly profit growth of more than sevenfold year-on-year, further reinforcing market expectations for continued expansion in AI chip demand.

However, investors remain focused on whether massive AI capital expenditures by major technology companies can translate into sustainable earnings growth.

Looking ahead, the market will closely watch the Federal Reserve's interest rate decision, as well as earnings reports from US technology giants including Microsoft and Alphabet.

In addition, Japanese corporate earnings and the Bank of Japan's monetary policy decision this week will also influence the subsequent direction of Japanese stocks.