Japan‘s undervalued stocks Gain Traction as AI Investment Concentrates
TOKYO – As investment in artificial intelligence becomes increasingly focused on a smaller group of companies, Japanese value stocks are re-emerging as attractive alternatives, bolstered by strong recent performance and anticipation of further gains. Analysts suggest companies expected to improve next fiscal year’s performance may have an advantage in attracting investment.
The shift comes amid growing skepticism about the sustainability of the recent surge in AI-related stocks. While long-term investment in AI is anticipated,some investors are beginning to seek opportunities outside of the sector,possibly driving funds toward undervalued stocks. This mirrors a trend observed in June, when value stocks outperformed as the NT multiple – the Nikkei Stock Average divided by the TOPIX – began to decline.
Yasuhiko Hirakawa, general manager of Rakuten Asset Management’s Second Investment Management Department, anticipates increased profit-taking in AI-related stocks following financial results. “Personally, I feel it’s okay to reduce my position little by little,” Hirakawa said, predicting a flow of funds into laggard stocks.
Nomura Securities’ Mr. Furukawa highlighted the November decline in the NT multiple, noting its correlation with the value stock outperformance in June and suggesting a potential repeat.
Japan’s largest tech investment trust also predicts the AI market will enter a second act, asserting that the current AI boom is “not a bubble.”
