Japan has returned to the center of the financial world. After decades of slow growth following its late-1980s market peak, the country’s stock index hit record highs in 2024.This comeback is driven by a mix of international currency moves, government support, and Japan’s essential role in building artificial intelligence (AI) technology. In this guide, we break down what is happening with the Japanese yen, highlight two key technology companies, and look at how investors can easily get involved.

1. Why Did the U.S. Step In to Support the Japanese Yen?

A notable shift occurred in global currency markets when Japan and the U.S. jointly intervened to support the Japanese yen. As the yen weakened against the U.S. dollar, Japan spent roughly $54 billion—supported by an estimated $10 billion from the U.S.—to stabilize its value.

Why would the U.S. help strengthen another country’s money? Three main reasons explain the move:

  • Keeping Markets Stable: Sudden drops in a major currency like the yen can cause unexpected shocks in global financial markets, including in the U.S.
  • Strong Partnership: Japan has been one of America’s closest economic allies for over 70 years.
  • Protecting U.S. Debt: The U.S. government funds much of its spending by issuing bond debt. Japan is the largest foreign buyer of U.S. bonds (holding about 13% of all foreign-owned U.S. debt). If the yen became too weak, Japan might have needed to sell off those U.S. bonds to raise cash, which could have driven up borrowing costs in America.

2. Japan’s AI Power: Selling the “Picks and Shovels”

During a gold rush, the people who sell tools like picks and shovels often make a steady profit, no matter who actually finds gold. Japan uses this exact approach in today’s AI expansion.

Rather than focusing solely on software, Japanese businesses manufacture the specialized hardware required behind the scenes.

  • Essential Suppliers: Japan is home to 60 major companies that directly supply components to top American AI firms (compared to just 12 major suppliers based in the U.S. itself).
  • Unmatched Market Control: For several specialized tech parts, Japanese suppliers produce nearly 100% of the world’s supply.
  • Driven by Demographics: With 40% of Japan’s population over age 55, the country relies on automation and AI to keep its economy running efficiently.

3. Two Key Japanese Tech Companies to Watch

1. NEC Corporation (Ticker: 6701)

  • What They Do: Founded in 1899, NEC started in basic electronics and grew into a major technology provider (much like the IBM of Japan). Today, they handle business IT services, telecommunications networks, and defense hardware like undersea communication cables.
  • How They Are Performing: Strong government spending on tech and defense helped NEC’s stock price rise 250% over three years. It currently trades at a reasonable price relative to its earnings, pays a small dividend, and carries a total company valuation of around $39 billion.
  • The Bottom Line: A reliable, long-standing tech company with a proven track record over more than a century.

2. Advantest Corporation (Ticker: 6857)

  • What They Do: Founded in 1954, Advantest builds testing equipment for computer chips. Before high-end AI chips made by brands like Nvidia or AMD leave the factory, they must be rigorously tested. Advantest controls about 50% of the global market for this high-end testing equipment.
  • How They Are Performing: Advantest is valued at over $100 billion. Analysts expect company earnings to nearly triple over the coming years as demand for powerful microchips continues to grow.
  • The Bottom Line: Much like semiconductor equipment maker ASML in Europe, Advantest fills an essential niche. As long as tech companies keep making chips, Advantest has products to test.

Quick Summary: Comparing Your Options

Company / AssetTickerMain FocusCompany SizeInvestor Fit
NEC Corp6701Business IT, Telecom, & Defense$39 BillionSteady growth & established brand
Advantest685750% market share in chip testing$100+ BillionHigh-tech growth focus
iShares MSCI JapanIJPN1,000+ Japanese stocks in one fundBroad FundBroad, low-risk diversification

4. Investing in the Whole Market via an Index Fund (ETF)

If picking single company stocks feels too specific, you can invest in Japan’s overall economic growth using an Exchange-Traded Fund (ETF). An ETF lets you buy a tiny slice of hundreds of companies all at once.

  • iShares MSCI Japan UCITS ETF: This popular fund holds shares in nearly 1,000 Japanese companies of all sizes.
  • What’s Inside: It includes household names like Toyota and SoftBank alongside tech leaders like Advantest and NEC.
  • Why Use It: It spreads your investment safely across industrial, financial, and technology sectors in one purchase.

Next Steps for Investors

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  • New to International Markets? Take the Investing for Beginners Package to learn how market cycles work, how to build a diversified portfolio using stocks and ETFs, and how to manage risk with confidence.
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