Japan's Nikkei heads for best week in five months on AI optimism

Japan's Nikkei index was on track Friday for its best week in five months, recovering from a sharp decline the previous week, driven by encouraging earnings and renewed optimism around artificial intelligence despite turbulence surrounding chipmaker Nvidia. The Nikkei rose 1.25% to 61,576.91 points, heading for a 7.3% weekly gain, its strongest since mid-June. Semiconductor stocks led the rally, with Advantest up 5.9%, Tokyo Electron up 3%, and Kioxia up 2.9%, even as Nvidia shares fell overnight. Gains in rival chipmakers Broadcom and Alphabet suggested investor confidence in the broader AI sector remained intact, with Nomura Securities strategist Maki Sawada citing the rebound in previously pressured AI-related stocks as a key driver. Reports of Nvidia CEO Jensen Huang's departure raised questions about the company's future direction and implications for US chip export policy and China market access, contributing to prior session weakness. Market breadth was positive with 138 advancers versus 82 decliners, while bank stocks rose 1% on higher US Treasury yields amid rate hike speculation.