Japan's Nikkei 225, the benchmark stock index, broke above 72,000 for the first time. Buying focused on semiconductor and robot-related stocks after the Japanese government announced a 10.5 trillion yen physical AI investment plan, worth about 100 trillion won.

According to blockchain media outlet Cryptopolitan on June 22 local time, the Nikkei 225 ended the session at 72,353.96, up 1.55 percent from the previous day. That marked a record close for a seventh straight session.

TOPIX also closed at 4,097.26, up 1.29 percent, at a record level. Both indices also set fresh intraday highs.

The rally has been driven by the Japanese government's large-scale strategy to foster physical AI. Prime Minister Sanae Takaichi is pursuing a growth strategy to expand AI from software-focused areas into industrial facilities, robots and manufacturing sites.

The government has decided to inject a 10.5 trillion yen budget into robots and industrial machinery. It also plans long-term investment totaling 370 trillion yen by 2040, combining public and private funds, worth about 3,525 trillion won.

Investment targets include 17 fields and 62 core technologies, including semiconductors and robots as well as drones, quantum computing, aerospace, cybersecurity, nuclear fusion and the marine industry. The Japanese government also plans to invest an additional 29 trillion yen in building AI infrastructure, including next-generation wireless communications, optical communications and subsea cables.

In the stock market, related beneficiaries rose broadly. Renesas Electronics gained 6.49 percent and Rohm rose 3.14 percent. Semiconductor testing equipment maker Advantest added 1.35 percent and Tokyo Electron climbed 3.24 percent. SoftBank Group, also seen as a major beneficiary of expanding AI investment, rose 1.87 percent.

Robot shares also jumped sharply. Yaskawa Electric surged 9.02 percent and Fanuc jumped 8.10 percent. By sector, nonferrous metals rose 7.57 percent for the biggest gain, followed by electric machinery and the glass and ceramics sector.

Japan's expanded investment also ties into demographic change. Japan has been presented as facing a situation in which it could lose about 15 million people from its working-age population over the next 20 years. The working-age population share is currently 59.6 percent. It is therefore expanding investment in AI and robot automation as a means to address labour shortages.

Japan already has global competitiveness in manufacturing automation. It operates 419 industrial robots per 10,000 manufacturing workers, and the installed base of industrial robots totals 435,000 units. Industrial robot shipments exceeded 160,000 units in 2024, accounting for 38 percent of global robot exports.

The policy direction over the past week has also pointed the same way. The Bank of Japan raised its benchmark interest rate to 1 percent as of June 16. On the same day, two ministries began reviewing a mandatory electric-vehicle battery collection programme. The Japanese Bankers Association then pointed to risks of AI-based cyberattacks on June 18, and Japan's AI Strategic Headquarters released a draft on June 19 to continuously assess AI-related laws.

As a result, Japan's market is focusing beyond the short-term share-price reaction on a long-term industrial investment plan that links AI to semiconductors, robots, communications infrastructure and cybersecurity. With the government having stated its intention to provide support separate from fiscal fluctuations, the next points to watch are the pace of actual execution and whether private investment spreads.