RBC BlueBay Asset Management expects Japanese artificial intelligence-linked equities to face a period of near-term weakness before resuming their rally into 2027, as investors take profits following a sharp run-up in valuations, according to a report by Bloomberg.
The firm's portfolio managers said the recent surge in Japan's AI-related shares has left parts of the market vulnerable to a short-term correction. However, they view any weakness as a buying opportunity, citing continued structural demand for AI infrastructure and the prospect of sustained earnings growth across the sector.
Japanese equities have been among the strongest-performing global markets this year, with the rally broadening beyond semiconductor equipment makers to component manufacturers and power infrastructure companies that supply AI data centres. The expanding participation has reinforced investor confidence in the durability of the theme, despite growing concerns over stretched valuations.
BlueBay's outlook contrasts with broader market concerns that the AI trade has become overheated. While acknowledging the risk of a near-term consolidation, the asset manager believes long-term fundamentals remain intact and expects renewed upside once valuations reset.
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