While key global markets are hitting new highs in 2025, it is Japanese stocks that have captured global attention with their unstoppable rally, propelling the Nikkei 225 to a record-breaking streak and positioning it as the best performer among developed economies.
The Nikkei 225, which tracks the performance of 225 highly capitalised and liquid publicly-listed companies in Japan, extended its winning streak into October, rising another 7.5% so far, after gaining steadily over the past six months. With this, the Japanese stock market index has surged nearly 60% from its April 2025 low of 30,374 to 48,163.
The surge has been driven by strong investor appetite for chip and AI-related stocks amid global AI optimism, as well as expectations of continued loose monetary policy and a favorable trade deal with the US, placing Japanese equities as the top performers on the global stage.
In the previous trading session, the index surged 5.5%, marking its biggest single-day gain since early April, after fiscal dove and pro-stimulus lawmaker Sanae Takaichi won the ruling Liberal Democratic Party’s leadership race over the weekend, setting her up to become Japan’s next prime minister.
Takaichi is expected to push the Bank of Japan to maintain its ultra-loose monetary stance, sending the yen sharply lower.
Japanese tech stocks zoom up to 290%
AI optimism has emerged as one of the biggest global drivers of stock market gains over the past year, powering the ongoing rally in US equities, with stocks such as Nvidia, Microsoft, and Alphabet leading the tech rally.
In Japan, chip-related firms such as Tokyo Electron, Advantest, and SoftBank have benefited from the same AI tailwinds. Advantest, which has the largest influence on the Nikkei 225 with a 9% weight, has gained 290% from the April lows to trade at JPY 18,195, marking the stock’s biggest sustained rally in the recent past.
Technology start-up investor SoftBank Group has also surged 271% over the same period, while other chip and AI-related stocks such as Disco Corp, Lasertec, and Tokyo Electron have risen between 80% and 140% from their April lows.
OpenAI CEO Sam Altman earlier this month visited Japan, where the company forged a partnership with Hitachi. Under the agreement, the Japanese conglomerate will support OpenAI in developing AI infrastructure by providing power transmission and distribution equipment for the startup’s data centers.
Meanwhile, the valuation of OpenAI, the ChatGPT maker, has reportedly surged to $500 billion, putting the startup on par with global corporate giants just three years after launching its flagship product.
Japan’s market cap zooms to $7.5 trillion
According to a recent Motilal Oswal report, Japan’s market capitalisation has risen to $7.5 trillion, gaining 13% over the past 12 months. This places Japan second globally in market cap-to-GDP ratio at 180%, behind only the USA, which stands at 230%.
In comparison, India’s market cap-to-GDP ratio is 123%, ranking fifth globally. Over the last 12 months, the global market cap has increased 15.6% to $19.5 trillion, whereas India’s market cap declined 10%, bringing its share of global market capitalisation down to 3.5% in September 2025.
India remains among the top 10 contributors to global market cap, having reached a peak share of 4.6% in September 2024, the report showed.
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