Japan's AI sector poised for growth despite short‑term market volatility

RBC BlueBay Asset Management warns that Japan's AI stocks may face a correction in July‑August as investors adjust to peak spending by U.S. hyperscalers and seasonal rebalancing. Portfolio manager Maya Funaki says the sector is likely to rebound by 2027, citing a structural upward trend and expected supportive U.S. policy before the mid‑term elections. BlueBay plans to keep its AI exposure while increasing cash reserves and shifting toward smaller‑cap AI companies to mitigate risk.

At the same time, analysts note that Japan's broader corporate reforms, a record fiscal stimulus and strategic state‑backed investments are strengthening the country's AI supply chain. Prime Minister Sanae Takaichi’s agenda includes funding for AI, robotics, semiconductors and space, while SoftBank has pledged more than $60 billion to OpenAI. Record‑high capital spending by firms such as Tokyo Electron and a surge in M&A activity further underline Japan’s positioning as a leading destination for AI‑related capital.