Nikkei 225 Forecast: AI Momentum and 60,000 Breakout Point to More Upside

The Nikkei 225 Index hit new record levels when the Japanese market opened after it had been closed during the Golden Week. As soon as the Tokyo stock exchange opened, investors began pricing into the international rally on Artificial Intelligence (AI) stocks that had taken place while they were away.

The stock price of Softbank jumped by over 18%, its largest gain since 2020. Other semiconductor companies also saw their stock prices surge. This surge in AI stocks suggests that Japan is a part of worldwide AI supply chain. Lower oil prices and easing geopolitical risks also increased investor appetite for risk.

AI Rally Pushes Nikkei 225 to Record Highs

The Nikkei 225’s sharp rally was a catch-up rally. Japanese markets were closed for the Golden Week holiday, while global technology stocks surged. The Nasdaq Composite has broken to a new high as AI-related stocks in the U.S. rallied. Advanced Micro Devices (AMD), Arm Holdings (ARM) and Super Micro Computer (SMCI) all had solid gains. Japanese stocks directly tied to the same AI theme saw investors flock to them upon Tokyo’s reopening.

Due to the perception of SoftBank as proxy for a number of AI assets, it was the primary driver of the rally. Its ties to Arm and OpenAI make it a prime target for the enthusiasm of investors towards AI. The stock surged by over 18% which indicates that the market is also factoring in the significance of SoftBank in the AI infrastructure trend due to the growing market for data centres, inference systems and agentic AI platforms. Despite the recent correction, the prce action for SoftBank remains bullish.

The rally also helped boost Japan’s semiconductor industry. Advantest’s shares rose by almost 7%, Tokyo Electron’s by 9% and Renesas Electronics’ by more than 13%.

These firms do well in a market in which investors anticipate increased demand for chips, test tools and data centre hardware. Advanced chips are not the only essentials for AI growth. It also requires servers, CPUs, testing systems, memory, power systems and supply chain support. This positions Japan’s tech industry to play a big part in the broader AI trade.

Yen Pressure and U.S.-Japan Talks Remain Key Risks for Stocks

The higher equity rally does not overcome the currency risk. The continued depreciation of the yen has contributed to rising import prices and home inflation in Japan. The chart below shows that Japan received surge in headline and core inflation in March 2026.

The chart below shows that the yen had again risen suddenly from about 157.8 to 155 against the dollar. This surge led to speculation that Tokyo may have intervened again. This is relevant to the Nikkei 225 as weaker yen would be beneficial for exporters but also creates inflation pressure and the risk for policy action.

But the timing matters as U.S. Treasury Secretary Scott Bessent is scheduled to meet with his Japanese counterpart in coming days. It is expected that he will have a meeting with Prime Minister Kishida, Finance Minister Kuroshichi and BOJ Governor Kazuo Ueda. They may discuss exchange rates, economic security, rare earths, energy procurement and Iran war.

These discussions are important as currency weakness is no longer just a market problem. It has now turned into a policy issue. If Japan and the U.S. continue to apply pressure to speculative selling of the yen then the market could be looking for more from Bank of Japan.

The near-term outlook for the Nikkei 225 is positive provided the AI trade remains robust and risk appetite in the world remains intact. But the rally could morph into a more selective one. Tech and semiconductor stocks may continue to lead as long as AI momentum remains strong in the U.S. However, a strong move by the yen to the upside could put pressure on exporters and spur profit taking.

Nikkei 225 Technical Analysis: Breakout Above 60,000 Points Toward 65,000

From a technical perspective, the Nikkei 225 continues to surge higher towards 65,000 after the breakout from the 60,000 area. The V-shaped recovery above the 200-day SMA and then the price compression below the 60,000 level indicate that the index will likely continue to trend higher over the next few days.

Any correction will likely find support at 60,000 for a stronger rally. The chart below shows that the price has been compressing each time before producing new record highs.

The price compression between 55,700 and 57,300 and then the price compression between 58,000 and 60,000 have introduced fresh insights into the Nikkei 225.

This suggests that if the price forms a top around the 63,000 level, then the price may even consolidate between 60,000 and 62,000 before the next advance.

Bottom Line

The Nikkei 225 is bullish with AI and semiconductor stocks all providing market momentum. The breakout over 60,000 has further bolstered the technical outlook and suggests a move to 65,000. But the rally will still hinge on global risk appetite, yen stability, BOJ signals, oil prices and U.S.-Japan currency talks. The index may correct back to 60,000 to 62,000 if traders take profits at 63,000. But this correction will likely initiate another rally to 65,000.