Japan's Nikkei rises for third day as data, earnings fuel AI optimism

Tokyo's Nikkei share gauge experienced a third consecutive day of gains on Wednesday, buoyed by positive data and earnings reports that revived some optimism in the struggling AI sector. The benchmark Nikkei 225 rose 0.80% to 60,942.48 by midday. The broader Topix index also climbed 0.79% to 3,924.51.

In a recent Reuters poll, Japanese manufacturers' sentiment reached its strongest level in over five years in November, driven by robust semiconductor demand. Despite US stocks closing lower overnight due to higher-than-expected inflation data, which raised expectations for a Federal Reserve rate hike, AI cloud company CoreWeave, after the bell, announced plans to become profitable on an adjusted basis in the first half of 2028.

According to The Wall Street Journal, ChatGPT operator OpenAI reported a 50% surge in quarterly revenue to $10 billion, even as it continued to report significant operating losses.

The focus of global AI-related shares shifted from last week's decline, fueled by concerns over potential US Congress restrictions on sector investment following Democrats' success in the midterm elections. Nomura Securities equity strategist Wataru Akiyama noted that strong third-quarter earnings from AI bellwether Nvidia could serve as a catalyst for a recovery in Japanese AI-related companies' stock prices.

SoftBank Group, a major investor in Japan's AI sector, reported a second-quarter net loss of 1.1 trillion yen ($6.93 billion) on Tuesday, causing its shares to fall 3.02% on Wednesday.

On the Nikkei 225, there were 149 advancers against 75 decliners. The top gainers included Nichirei, which surged 8.18% to its biggest one-day gain since November 2022, followed by Kokusai Electric and Taiyo Yuden, both up around 7.5%. On the downside, Mitsui Kinzoku dropped 7.28%, DeNA declined 6.90%, and Tokyu sank 5.63%, marking its steepest one-day fall since August 2024.