SoftBank surpasses Toyota for first time since 2000

SoftBank briefly overtook Toyota as Japan’s most valuable company last week, marking the first time since February 2000 that the conglomerate claimed the top spot. A relentless stock rally inflated SoftBank’s market capitalization by more than $120 billion over six months, though Toyota reclaimed the lead just three days later. The last time SoftBank held this position was right before the dot-com bubble collapsed, with its shares plunging roughly 90% within a year.

The AI-or-nothing rally is reshaping Japan Inc. at an astonishing pace. Kioxia, a NAND flash memory maker, ranked as Japan’s 154th largest company a year ago. Now it sits firmly in the top three, having leapfrogged Nintendo, Sony, Panasonic, and Canon thanks to surging demand for AI-driven memory. Murata Manufacturing, which produces tiny multilayer ceramic capacitors essential for stabilizing power in electronic devices, and chip tester Advantest have both joined Japan’s revamped AI-flavored top 20. Meanwhile, Nintendo, despite releasing the fastest-selling console of all time, has fallen more than 20 places and barely holds onto the top 30.

The parallels to the dot-com era are hard to ignore. In early 2000, Japan’s top 20 was dominated by internet winners like NTT, Hikari Tsushin, SoftBank, Fujitsu, and NEC, several of which weren’t even in the top 50 a year earlier. By the end of 2001, Hikari Tsushin had plummeted to 615th. Chris Smith, co-manager of the Japan Value Fund at London-based Polar Capital, noted, “The dot-com bubble is certainly relevant now. The breadth of market returns is so narrow and I’m not sure how much longer that can continue.”

The concentration is acute in Japan. Chip makers and component companies have soared on data center demand, while downstream gaming and consumer electronics firms struggle with ballooning material costs. Automakers, a pillar of Japanese manufacturing, have lagged under tariff and geopolitical pressure. On Monday, SoftBank and Kioxia fell more than 6% in an AI-led selloff, while Nintendo, Capcom, and Recruit rallied. Japan’s broader Topix index outperformed the tech-heavy Nikkei 225 by more than a percentage point.

However, this might not be 2000 all over again. Japan’s large number of AI laggards could save its market from a dot-com-like implosion. Smith argued that companies left behind by the AI rally offer “very strong relative returns” when the inevitable rotation comes. SoftBank’s reign lasted three days this time, compared with more than two weeks in 2000. Kazuhiro Sasaki, head of research at Phillip Securities Japan, pointed out that Toyota’s resilience,holding the top spot despite its shares sliding more than 10% this year,shows Japanese manufacturers still hold value beyond the AI hype.

A string of mega tech IPOs in coming months will test the rally’s durability. SpaceX lists this week, and OpenAI and Anthropic have filed. If the market absorbs them without correction, the AI trade may prove more durable than dot-com. If not, the parallel will sharpen. The dot-com bubble comparison is not a prediction but a pattern describing what happens when a narrow set of companies absorbs most capital in a market. The question is whether this time the underlying revenue justifies the valuations. In Japan, where Kioxia went from 154th to third in a year, that question is louder than anywhere else.