Japan's Nikkei rises for third day as data, earnings fuel AI optimism

By Rocky Swift

TOKYO, Nov 11 (Reuters) - Japan's Nikkei share gauge climbed for a third straight session on Wednesday, as data and earnings reports restored some optimism to the battered AI sector.

The benchmark Nikkei 225 .N225 advanced 0.80% to 60,942.48 as of the midday break. The broader Topix .TOPX climbed 0.79% to 3,924.51.

Japanese manufacturers' sentiment rose to its strongest level in more than five years in November, a Reuters poll showed on Wednesday, as booming semiconductor demand underpinned broad-based optimism.

While US stocks closed lower overnight, as hotter-than-expected inflation data raised expectations for a Federal Reserve rate hike, AI cloud company CoreWeave CRWV.O, after the bell, said it would become profitable on an adjusted basis in the first half of 2028.

The Wall Street Journal reported that ChatGPT operator OpenAI's quarterly revenue rose about 50% to $10 billion, even as it continued to post steep operating losses.

Global AI-related shares plunged last week on concerns that the US Congress could slow investment in the sector following the Democrats' landslide victory in the midterm elections.

Investor focus now turns to third-quarter earnings from AI bellwether Nvidia NVDA.O next week, said Nomura Securities equity strategist Wataru Akiyama.

"If they are strong enough to dispel concerns about the earnings of these AI and semiconductor-related stocks, then that impact will likely spread to Japan’s major AI-related companies as well," Akiyama said. "This could serve as one of the catalysts for a recovery in those stock prices."

SoftBank Group 9984.T, one of Japan's biggest AI investors, said after the close on Tuesday that it swung to a second-quarter net loss of 1.1 trillion yen ($6.93 billion). Its shares tumbled 3.02% on Wednesday.

There were 149 advancers on the Nikkei 225 against 75 decliners.

The largest percentage gainers were Nichirei 2871.T, up 8.18% and set for its biggest one-day gain since November 2022, followed by Kokusai Electric 6525.T and Taiyo Yuden 6976.T, up around 7.5%.

The biggest losers were Mitsui Kinzoku 5706.T, down 7.28%, followed by DeNA 2432.T, 6.90% lower, and Tokyu 9005.T, which sank 5.63% toward its steepest one-day fall since August 2024.

($1 = 158.7600 yen)