AI bubble concerns rise as Japanese stock market saw capital outflows last week

Glonghui June 4th – According to data from Japan Exchange Group, as of the week ending May 29, overseas investors were net sellers of approximately 395 billion yen (about $2.5 billion) in Japanese stocks, ending eight consecutive weeks of net buying. This sell-off occurred as the Nikkei 225, dominated by technology stocks, surpassed the 65,000-point mark for the first time, mainly driven by artificial intelligence-related stocks such as SoftBank, Kioxia, and Murata Manufacturing. The rapid rise of the Nikkei Index has sparked concerns among some market participants about overheating, prompting them to take profits. Pelham Smithers, Managing Director of UK equity research firm Pelham Smithers Associates, said: “More and more people believe that artificial intelligence is developing into a bubble. We estimate that by 2026, about 70% of the gains in the Japanese stock market will be contributed by AI-related stocks.” He noted that as caution increases, some global investors “hope to exit Japan and shift funds to markets such as Europe, where the AI component is less pronounced.”