AI Boom Expected to Lift Japanese Corporate Profits to Sixth Straight Record Year

Major Japanese companies are expected to post record net profits for a sixth consecutive fiscal year, as strong demand for artificial intelligence (AI)-related technologies is projected to outweigh higher input costs stemming from the Middle East conflict, Kyodo News reported.

Japanese technology and semiconductor companies are expected to drive another year of record corporate profits. (Photo: Preferred Networks X)

The ongoing expansion of AI data centers is expected to continue boosting manufacturers of semiconductors, chipmaking equipment and electronic components during the fiscal year ending in March 2027.

SMBC Nikko Securities forecasts that the combined net profits of 250 major companies listed on the Tokyo Stock Exchange will increase 19.3 percent this fiscal year, led by semiconductor-related firms.

Nomura Securities expects average net profit growth of 5.9 percent for 242 major listed companies, while Daiwa Securities projects 5.1 percent growth for 210 companies.

"AI and semiconductor-related companies are leading the climb in profits and are expected to continue growing as some negative factors, including high crude oil prices, are starting to settle," said Hikaru Yasuda.

According to Mainichi Japan, crude oil prices surged after the February US-Israeli strikes on Iran disrupted energy supplies. Japan remains heavily dependent on crude oil imports from the Middle East, much of which passes through the Strait of Hormuz.