Nikkei 225 Rallies 4% as Chip Stocks Rebound Alongside Record KOSPI Surge on Microsoft Earnings Beat

Japan's benchmark Nikkei 225 index surged 4.03% on Friday, climbing 2,494.59 points to close at 64,362.02, as a powerful rebound in global chip and technology stocks swept across Asian markets following blockbuster quarterly earnings results from Microsoft, Amazon and Meta Platforms.

The rally in Tokyo came alongside an even more dramatic surge in neighboring South Korea, where the benchmark KOSPI index posted its largest single-day gain on record, jumping 17.91% to close at 6,595.45. Chipmaking giants Samsung Electronics and SK Hynix each surged more than 20% during the session, effectively hitting the South Korean exchange's daily limit for individual stock price movements, as investors rushed back into semiconductor names that had been battered by a punishing selloff earlier in the week.

Both rallies traced their origins directly to a powerful overnight session on Wall Street. Microsoft's shares soared 15.5% Thursday, marking the company's best single-day performance in nearly 18 years, according to the Associated Press, after the technology giant reported that its Azure cloud computing division grew 43% during the quarter, easing broader investor concerns about the sustainability of massive capital spending on artificial intelligence infrastructure. Amazon and Meta Platforms also posted results that exceeded market expectations, reinforcing confidence that demand for AI-related computing infrastructure remains robust despite growing skepticism in recent weeks. The technology-heavy Nasdaq 100 climbed more than 3% Thursday, snapping a six-day losing streak, while the Philadelphia Semiconductor Index posted its strongest single-day advance in more than a year.

The Asian technology rally extended well beyond Japan and South Korea. Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker, rose 8.6% during the session, contributing significantly to broader gains across the MSCI Asia Pacific Index, which advanced approximately 3.6%, according to reporting from the Private Banker. The rebound reflected a broader shift in sentiment across the region's technology-heavy equity markets, which had endured a difficult stretch throughout late July amid mounting concerns about a potential bubble in artificial intelligence valuations and intensifying competitive pressure from Chinese chipmaking rivals.

Friday's rally followed a brutal several days for Japanese and South Korean markets alike. South Korea's KOSPI had plummeted more than 17% over the three trading sessions preceding Friday, according to the Associated Press, with the index falling as much as 40% from its June peak at one point during the selloff, wiping out nearly $2 trillion in market value. Japan's Nikkei had similarly faced pressure during the same window, as the broader selloff in chip and technology stocks spread across regional markets tied closely to global semiconductor supply chains and artificial intelligence infrastructure spending.

Currency markets also factored into Friday's broader Asian market dynamics. The Bank of Japan left its benchmark interest rate unchanged during a policy decision this week, a move that came in line with forecasts from all 52 economists surveyed by Bloomberg, following the central bank's assessment of the effects of its earlier increase to 1% in June. The yen weakened further against the dollar during Friday's session, according to the Private Banker, a dynamic that has continued to shape sentiment among Japanese exporters and technology manufacturers whose overseas earnings benefit from a softer domestic currency.

Beyond the corporate earnings catalyst, structural and regulatory factors also appeared to reinforce Friday's rally in South Korea specifically. SK Group Chairman Chey Tae-won disclosed personal purchases of SK Hynix shares during the recent selloff, a move that bolstered investor confidence in the world's second-largest memory chipmaker, according to CNBC. New cash-deposit requirements for investors using leveraged exchange-traded funds also took effect July 31 in South Korea, a regulatory change some analysts said may have contributed to broader repositioning among traders active in that segment of the market, while short-covering and mechanical rebalancing tied to leveraged ETFs amplified the scale of the overall move.

Despite the magnitude of Friday's rebound across both markets, analysts urged caution against interpreting the gains as a definitive turning point. One market strategist, speaking to CNBC, said foreign investors appeared to be the primary force behind the day's rally but cautioned that similarly dramatic gains were unlikely to persist. "I would not expect gains of this magnitude to continue," the analyst said, noting that asset prices had become "completely disconnected" from underlying fundamentals amid the recent volatility.

Even after Friday's historic surge, South Korea's KOSPI remained well below its levels from earlier in the year, having recorded its worst monthly performance since 1997 with a 22.19% decline over the course of July, according to TradingKey. Japan's Nikkei similarly remained below levels reached prior to the recent selloff, underscoring that Friday's rebound, while dramatic in scale across both markets, only partially offset weeks of accumulated losses tied to the broader reassessment of artificial intelligence infrastructure spending sweeping through global technology and semiconductor stocks.

With both the Nikkei and KOSPI having now demonstrated the capacity for extraordinary swings in both directions within a single week, investors across the region are likely to watch closely in the sessions ahead for further signals from upcoming corporate earnings and central bank policy decisions on whether Friday's rebound reflects a genuine stabilization in sentiment toward AI-linked technology stocks or simply another sharp swing within a prolonged period of volatility across Asian equity markets.