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Goldman flags Japan AI stock rout as a buying opportunity
Goldman Japan’s chief equity strategist said the bar for AI-related earnings has been lowered after the selloff, with Japan’s earnings season starting this week.
Goldman Sachs Japan Co. said the sharp selloff in Japan’s AI-linked stocks is not a broken trade, arguing investors may be able to add at lower levels as earnings expectations reset. Chief Japan equity strategist Bruce Kirk said the correction has lowered the bar for what investors need to see, which could allow strong results to move share prices more than they did at the end of June.
Kirk tied the constructive view to the absence of a major deterioration in the geopolitical situation. He also pointed to shifting focus from momentum and crowded positioning back to fundamentals, saying “ultimately, it’s going to come down to earnings,” with a strong set of numbers potentially refocusing investors on the AI earnings story at “significantly lower levels.”
The selloff has been part of a broader unwind in semiconductor and AI beneficiary shares, sweeping across Japan, South Korea, and Taiwan as investors questioned how long lofty valuations and the AI investment boom can last. The report also cited concerns including crowded positioning, rising corporate debt, and competition from Chinese rivals.
Goldman said Japan’s earnings season is set to ramp up this week, with chip suppliers including Advantest Corp., Tokyo Electron Ltd., and Kioxia scheduled to report first-quarter results. It estimated first-quarter net profits for companies in the broader Topix index with February or March fiscal year-ends, excluding SoftBank Group Corp., could rise about 26% from a year earlier, with a significant portion of the gains coming from AI-related companies.