Tech now represents roughly 56% of Nikkei index weight, up from 35% in 2022. As
the AI-driven tech rally cools, Japanese equities have pulled back, echoing
volatility in other tech-heavy markets. DWS global CIO Vincenzo Vedda cut
semiconductor to neutral after the Philadelphia Semiconductor Index rallied
about 90% in Q2, warning that slower-than-expected AI commercialization could
prompt cloud providers to pare capex. Despite the pause, most institutions
remain constructive: JPX says the market has shown resilience and buyers emerge
on dips, while Citigroup Tokyo strategist Ryota Sakagami notes rapidly upward
revisions to tech EPS have kept price moves within a “healthy growth” range
rather than signaling a bubble. Valuation supports the bullish case: Nikkei 225
forward 12-month P/E near 22x versus over 60x in the 1980s bubble.
Japanese capital-market reforms are also cited as a driver of foreign inflows.
