Stocks volatile on selling of AI-related stocks post-US midterm elections, but broad base of earnings growth: Jul-Sep results (30% of results announced)

In the Japanese equity market on November 4, selling spread, centered on AI and semiconductor stocks, on concerns over restrained investment in AI data centers following the early results of the US midterm elections. TOPIX and the Nikkei 225 were volatile, more so than the KOSPI, partly due to the public holiday in Japan the previous day. Meanwhile, Jul-Sep results announced so far (30% of the total) indicate expectations for strong profit growth, driven by AI and semiconductors, but the materials, real estate, trading company, construction, and pharmaceutical sectors are also contributing to earnings growth. We calculate that the expected increases in sales and profit are about 10% even excluding AI- and semiconductor-related companies, which have generated strong profit growth, and electric power & gas utilities, where profit growth has been weak. Shareholder returns, which had been a concern, also continue to rise and seem likely to reach a record high. Furthermore, not only AI- and