Nikkei Swings as AI Stocks Slip Ahead of Nvidia Earnings

The Nikkei share average in Japan moved between small gains and losses on Monday as investors remained cautious ahead of Nvidia's earnings later this week. Artificial intelligence-related stocks came under pressure, with Fujikura falling 3.5% and SoftBank Group dropping 3.3%. In contrast, chip-making equipment manufacturers performed better, with Tokyo Electron gaining 2.1%. Investors are focused on Nvidia's results due on Wednesday, amid concerns over rising costs in the artificial intelligence supply chain.

According to Bloomberg, Nvidia informed some of its largest customers that AI server prices could rise by more than 15% because of surging memory costs. Nomura Securities equities strategist Wataru Akiyama viewed concerns about semiconductor companies' profitability, led by Nvidia, as a trigger for selling after a significant build-up in margin trading positions.

However, rising bond yields and growing inflation concerns could make it difficult for Japanese equities to sustain their recent upward momentum. The prospect of further monetary tightening by the Bank of Japan is adding to market caution, particularly as investors assess the impact of higher borrowing costs on corporate earnings and equity valuations.