Nikkei Tops 70,000 for the First Time: Chase the AI Rally or Guard Against It

The Nikkei average broke 70,000 for the first time on June 18, a record high led by AI and semiconductor stocks. But for anyone holding Japanese ETFs or funds, the record itself matters less than understanding where the gains sit, what backs them, and whether they can still be chased. The rally has three engines: surging AI compute demand lifting Japan's chip-related firms, a weak yen padding exporter profits, and global money seeking growth outside US equities. The key is separating gains backed by real earnings from those inflated by sentiment and liquidity—both are present in the chip leaders, and mistaking others' excitement for your own margin of safety is dangerous. That is why analyst Hiroki urges looking beyond crowded AI and chip names toward overlooked sectors with solid fundamentals. On high-dividend stocks, beware two traps: chasing a high price dilutes the effective yield, and some payouts are propped up by shrinking investment rather than sustainable cash flow. Taiwanese investors carry a hidden risk too—currency. Returns must be converted back to NT dollars, and a weak yen near 161 can erode equity gains. Watch three things: whether AI earnings actually materialize, the BOJ's rate path, and the yen. At record highs, discipline beats the courage to chase.