The proportion of Japanese companies exceeding profit expectations has reached a five-year high, with growth expanding from AI to a wider range of sectors.

(1) Overall Strong Performance: In the three months ending June, approximately 71% of Japanese companies reported profits exceeding analysts' expectations. The combined net profit of the 500 largest companies reached 21 trillion yen (about $132 billion), surpassing the previous year's record of around 18 trillion yen; the profit margin for TOPIX index constituents is projected to reach 9.3%, marking the highest level in more than thirty years.(2) Broader Growth Scope: Previously, growth was mainly concentrated among technology and AI-related companies. However, the latest financial reports indicate that, as companies successfully pass on higher costs to customers, profit growth is expanding into broader sectors, with companies oriented toward domestic demand also outperforming expectations.(3) Market Outlook: According to a strategist at Resona Holdings, investor interest has broadened compared to before, and this trend is expected to continue, with growing market anticipation that strong profit growth across various industries will drive a rebound.