Nikkei wavers as AI stocks weigh ahead of Nvidia earnings

[TOKYO] Japan’s Nikkei share average moved between small gains and losses on Monday (Aug 24), with artificial intelligence-related shares under pressure ahead of Nvidia earnings later in the week.

The market was also weighed down by inflation worries amid continued uncertainty in the Middle East, with investors and analysts expecting the Bank of Japan to raise interest rates at its next policy meeting in September.

Japanese government bond yields ticked higher in morning trading.

The Nikkei was 0.2 per cent higher at 65,900.95 at 0156 GMT, after oscillating between gains of as much as 0.4 per cent and losses of 0.5 per cent.

Most AI-related shares, which tend to be heavily weighted on the Nikkei, declined, with Fujikura losing 3.5 per cent and SoftBank Group slipping 3.3 per cent.

Chip-making tool manufacturers outperformed, though, with Tokyo Electron rising 2.1 per cent.

The broader Topix inched up 0.1 per cent.

Nvidia has notified some of its largest customers that AI server prices will rise by more than 15 per cent amid soaring memory costs, Bloomberg reported on Saturday. The company announces financial results on Wednesday.

“We view the concerns over the profitability of semiconductor-related companies — led by Nvidia — as little more than a pretext or trigger for selling” following “a significant build-up of open positions in margin trading recently”, said Wataru Akiyama, an equities strategist at Nomura Securities.

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“I think it is fair to say that the outlook for earnings growth in AI and semiconductor-related stocks has not changed.”

At the same time, with bond yields rising as a result of building inflation worries, “it does not appear that the Japanese stock market is currently in a position to sustain an upward trend”, he added. REUTERS