SoftBank Group has overtaken Toyota Motor to become Japan's most valuable company, ending the automaker's more than 20-year reign at the top and signaling how global capital's pursuit of AI and semiconductors is profoundly reshaping Japan's equity landscape.
On Monday, SoftBank's share price surged more than 13% intraday to a fresh record high, pushing its market capitalization above 46 trillion yen (approximately $288 billion). Meanwhile, Toyota's shares fell nearly 4.5%, dropping its market value below the 46 trillion yen mark and ceding the top spot.
This historic shift occurred against a backdrop of overall market strength. The Nikkei 225 index, which has a heavy weighting in tech stocks, rose over 1.2% in the first hour of trading on Monday, breaking through the 67,000-point level for the first time and bringing its year-to-date gains close to 30%.
**AI Bets Drive SoftBank's Surge**
SoftBank's share price has soared nearly 73% year-to-date, making it one of Japan's best-performing large-cap stocks. The core driver of this rally is the market's ongoing re-rating of SoftBank's AI strategy.
The company holds significant exposure to ChatGPT developer OpenAI and harbors broader strategic ambitions in AI. On Monday, SoftBank announced plans to invest up to 75 billion euros in France to build large-scale AI computing cluster networks, further bolstering market confidence in its AI positioning.
SoftBank's shares had previously retreated sharply from a peak in October last year as investor sentiment turned cautious amid uncertainty over OpenAI's future. Sentiment has since reversed as OpenAI's plans for a US listing have taken shape and SoftBank's core asset, chip designer Arm, forecast growth in its own semiconductor revenue.
**Toyota's Fall and a Reshaped Market**
Toyota first claimed the title of Japan's most valuable company in 2003 by surpassing telecom operator NTT Docomo and held the top spot for over two decades. Its replacement by SoftBank reflects a structural shift in global investor preference—away from traditional manufacturing and industrial giants and toward assets linked to AI and semiconductors.
Equity analysts at Nomura stated last week that they expect the Nikkei 225 to reach 68,000 points by the end of 2026, potentially rising further to 70,000 next year, partly driven by upward revisions to profit forecasts for AI and chip companies. However, Nomura's chief equity strategist, Tomochika Kitaoka, also cautioned: "In the short term, we believe it is time to examine whether the pace of improvement in AI and semiconductor earnings forecasts can be sustained."
Shares of semiconductor manufacturer Kioxia have skyrocketed over 525% this year, with the market anticipating its memory chips will benefit from explosive demand for data center construction. The company is now Japan's third-largest listed company by market value, surpassing the nation's largest bank, **Mitsubishi UFJ** (MUFG).
**Foreign Inflows Fuel Japan's Large-Cap Tech**
Analysts note that the strong performance of SoftBank and other Japanese AI-related companies also benefits from a marked resurgence in foreign investor interest in Tokyo's stock market. For the week ending May 23, overseas investors were net buyers of Japanese stocks to the tune of 1.1 trillion yen, marking the eighth consecutive week of net purchases.
Neil Newman, chief strategist at Tokyo-based Astris Advisory, said: "We have been saying for some time that when large US funds truly start entering the Japanese market, a shortage of investable large-cap companies will quickly emerge, and large tech stocks like SoftBank will benefit significantly."
Jesper Koll, a director at brokerage Monex Group, attributed this trend to a deeper market logic: "Japanese companies cannot escape the spirit of the times—charismatic leadership and bold risk-taking are now defeating a fixation on incremental improvement and rock-solid balance sheets."