Japan Equity Style Investing: From Breakout to Giveback: AI Momentum Cools After Record High, Setting Up a July Rotation

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Japan Equity Style Investing: From Breakout to Giveback: AI Momentum Cools After Record High, Setting Up a July Rotation

J P M O R G A N Global Markets Strategy

09 July 2026

Japan Equity Style Investing

From Breakout to Giveback: AI Momentum Cools After

Record High, Setting Up a July Rotation

• Japanese equities strengthened in June as the global AI semiconductor boom Global Quantitative and Derivatives

accelerated further, with the Nikkei 225 reaching a record high of 72,366 on Strategy

June 25. Underpinned by the resilience of the real economy and expanding Masanari Takada AC

earnings at AI-related companies, Beta and Momentum retained their (81-3) 6736-8636

leadership, albeit with signs of overheating. That said, from late June, moves masanari.takada@jpmorgan.com

that appear to reflect a reaction began to stand out across major markets, and JPMorgan Securities Japan Co., Ltd.

in Japan as well, the Momentum effect started to unwind, particularly in AI- Tony SK Lee

related names. Since the start of July, Momentum has continued to exhibit (852) 2800-8857

tony.sk.lee@jpmorgan.com

reversal-like behavior. J.P. Morgan Securities (Asia Pacific) Limited/ J.P.

Morgan Broking (Hong Kong) Limited

• We view the current correction in AI Momentum as part of a healthy Robert Smith, PhD

unwinding, despite the choppiness of price action. Given how rapidly the

(61-2) 9003-8808

polarization between AI-related sectors and the rest of the market has robert.z.smith@jpmorgan.com

progressed, the reversal is prone to being sizable as well. In particular, buying J.P. Morgan Securities Australia Limited

by short-sighted speculative players unaccustomed to momentum investing Khuram Chaudhry

appears to have swelled in June, and we expect Momentum and Beta to face an (44-20) 7134-6297