The global artificial intelligence boom is reshaping the valuation landscape for domestic companies in Japan, with Kioxia Holdings Corp. making a strong push to become the country's second-largest listed company by market capitalization.

At the time of writing, the memory chipmaker's stock continued its previous upward trend, rising over 3% during the session. Its market capitalization briefly exceeded 45 trillion yen (approximately $281 billion), surpassing that of Toyota Motor Corp. for a period. This epic rally has occurred just 18 months after the company's listing.

The Japanese memory leader's stock has surged over 660% year-to-date, topping the annual gains list for the MSCI Inc global index.

Jumpei Tanaka, Head of Japan Investment Strategy at Pictet Asset Management Japan Ltd, stated that the reshuffling of market cap rankings among Japan's top companies could reshape how overseas capital perceives and prices Japanese equities.

"The market's inherent perception of Japanese assets will gradually shift from being 'dominated by cyclical and manufacturing stocks' to being 'led by AI-driven semiconductor growth stocks'," Tanaka said. "This will encourage global capital to position Japan as a key allocation target within AI investment portfolios, driving sustained cross-border capital inflows."

Behind this migration of Japanese capital from traditional industry leaders to technology plays is the surge in demand for memory chips from AI data centers, which has ignited global investment enthusiasm for the semiconductor sector. Kioxia, alongside its global peers, is benefiting from this valuation uplift.

Toyota, which has dominated the top spot in Japan's market cap rankings for years, is now seeing its position rapidly decline. Catalyzed by positive sentiment around OpenAI's listing, SoftBank Group Corp. surpassed Toyota in market value earlier this week.

Kioxia's predecessor was the memory business unit of Toshiba Corp., the pioneer of NAND flash memory technology. In 2019, a consortium led by Bain Capital completed the spin-off and acquisition of this business, which was subsequently rebranded as Kioxia following its independence.