Nikkei Index AI Boom's Third Wave: Data Center Components Become the New Engine

Japan's Nikkei index surged 37% in the first half of 2026, significantly outperforming major indices in the United States, Europe, and China. The bull market was initially driven by the AI boom, but the structure of the driving forces is undergoing a profound shift—from chipmakers and equipment manufacturers to components and power infrastructure essential for data centers.

From Chips to Components: The Diffusion Path of the AI Hype

The first wave of the AI rally was led by well-known semiconductor-related stocks such as SoftBank Group, Advantest, and Tokyo Electron. The second wave spread to optical fiber cable manufacturers like Fujikura and Furukawa Electric. Now, the third wave is extending to critical components and power infrastructure indispensable for data centers.

Multilayer Ceramic Capacitor (MLCC) manufacturers Murata Manufacturing and Taiyo Yuden have become the latest growth engines. Murata's stock rose 268% year-to-date, while Taiyo Yuden surged 438%, second only to memory chip maker Kioxia—which surpassed Toyota Motor this month to become the best-performing component in the Nikkei index.

These MLCCs are used for power regulation in AI servers. As AI data centers' demand for electricity surges, the volume and specification requirements for passive components have significantly increased. Murata and Taiyo Yuden dominate the global MLCC market, and their technological expertise and production capacity make them direct beneficiaries of AI infrastructure expansion.

Another standout is Ibiden, a packaging substrate manufacturer supplying to AI bellwether Nvidia, with its stock rising 292%. The latest addition to the rally is Panasonic Holdings, which announced mass production of data center battery cells at its Kansas factory in the U.S., sending its stock to an all-time high.

Concerns over Concentration

According to data from Takamasa Ikeda, senior portfolio manager at GCI Asset Management, chip-related stocks such as Tokyo Electron, Advantest, and Kioxia account for approximately 25% of the Nikkei index's market capitalization. When adding companies like Murata, Sony Group, and Kyocera, this weight rises to 35%.

Such high concentration brings risks. As of last week, the Philadelphia Semiconductor Index (SOX) was trading more than 70% above its 200-day moving average, which is typically considered an overheating signal.

Ikeda noted: "The SOX index may find it difficult to maintain its current medium- to long-term momentum. If the SOX corrects, the Nikkei index will not be spared."

Japan's Advantage in AI Infrastructure

This structural shift highlights Japan's unique position in the AI infrastructure supply chain. The U.S. leads in AI chip design, but manufacturing, packaging, passive components, and power management heavily rely on Japanese and Asian suppliers.

Japanese companies' long-term technological accumulation in MLCCs, semiconductor equipment, and packaging substrates has enabled them to achieve significant growth as AI computing demand surges. This is not merely short-term enthusiasm in capital markets; it reflects the competitiveness of Japanese manufacturing in high-end electronic components.

However, over-reliance on a single industry may also bring risks. If AI demand experiences a cyclical slowdown, Japan's stock market and real economy will face considerable impact.## Outlook: The Next Frontier of AI Investment

Investors are searching for the next growth point related to AI data centers. Sub-sectors such as power management, cooling systems, and connectors may become the next wave of hotspots. Japanese companies like Nidec and Nidec Corporation have advantages in precision motors and cooling solutions, and may attract more attention in the future.

The wave of AI is far from over, but the narrative of Japan's tech industry is shifting from "chip manufacturing equipment" to "physical infrastructure for running AI." This shift not only affects the structure of stock market fluctuations, but also reveals the importance of hardware infrastructure in the global AI race.