Japan’s Nikkei Index rides $65B physical AI commitment to close at record levels

Japan’s Nikkei 225 crossed the 72,000 level for the first time ever today, June 22, riding the high from the 10.5 trillion yen ($65.1 billion) that the Japanese government committed to in a public—private physical AI spending plan expected to spread across 17 strategic sectors by fiscal 2040.

The benchmark index closed at 72,353.96, up 1.55% on the day, according to Yahoo Finance data. It was the seventh consecutive session ending at a record high. The broader Topix index gained 1.29% to 4,097.26, with both gauges setting fresh intraday peaks.

The optimism came from government messaging signaling that it plans to insulate funding for the 17 sectors on its list from normal budget cycle fluctuations, as long as the national debt-to-GDP ratio stays on a declining path.

Japan’s physical AI commitment is part of a $2.3 trillion growth bet

Japan’s Prime Minister Sanae Takaichi’s growth strategy is focusing on figuring out ways to move artificial intelligence technology from software environments into real-world hardware. 

The 10.5 trillion yen earmarked for the physical AI strategy will touch everything from robots to industrial machinery. 

Also, it is just one layer of the roughly 370 trillion yen ($2.3 trillion) that the Takaichi government has committed to in combined public and private investment through 2040. Semiconductors, drones, LNG shipbuilding, defense, quantum computing, aviation and space, content industries, cybersecurity, nuclear fusion, and marine industries are among the 17 fields and 62 specific products and technologies under consideration. 

Another 29 trillion yen is supposed to be funneled into communications infrastructure, spanning next-generation wireless, optical communications, and undersea cables, to support AI deployment at scale.

Chip and robotics stocks led Nikkei’s Monday’s rally

The hope is that corporate investment and growth plans evolve into long-term strategies now that the government has signaled its all-in AI strategy. However, the short-term results are showing up on the big screens already. 

Investors piled into technology and manufacturing names tied to the AI buildout. Renesas Electronics jumped 6.49%, while chipmaker Rohm gained 3.14%. Chip-testing equipment maker Advantest rose 1.35%, and Tokyo Electron added 3.24%. SoftBank Group, a major backer of AI rollouts, climbed 1.87%.

Robotics stocks also put up strong contenders for Monday’s biggest winners. Yaskawa Electric surged 9.02%, and Fanuc gained 8.10%. Non-ferrous metals led the Topix sector gains at 7.57%, followed by electric appliances and glass and ceramics products.

Demographics are driving the spending

Japan’s physical AI push is inseparable from its population crisis. The country stands to lose around 15 million working-age people over the next two decades, according to an Acumen Research and Consulting analysis cited by Cryptopolitan. The working-age share of the population currently sits at 59.6%.

Japan already maintains one of the highest robot densities on the planet: 419 robots per 10,000 manufacturing workers, with 435,000 industrial units installed, per the same analysis. The country shipped more than 160,000 industrial robots in 2024, representing 38% of global exports in the sector and roughly $12.5 billion in value.

The policy sequence over the past week underscores how coordinated the push has become. On June 16, the Bank of Japan raised its benchmark rate to 1%. The same day, two ministries began examining a mandatory EV battery collection program. 

On June 18, the Japan Bankers Association flagged risks from AI-powered cyberattacks. And on June 19, the AI Strategic Headquarters released a draft proposal for ongoing assessment of AI-related legislation, Cryptopolitan reported.