Japanese companies are on track to deliver record earnings in fiscal 2026, supported by sustained expansion in information technology and a fading drag from US trade measures that weighed on profits in the past year.

According to Kyodo News, analysts expect the rapid build-out of artificial intelligence infrastructure to continue driving growth across semiconductors and IT services, providing a powerful tailwind for corporate earnings. That momentum is likely to be reinforced by economic policies under Prime Minister Sanae Takaichi, which are aimed at accelerating investment in strategically important industries.

Forecasts from major brokerages point to solid profit growth over the next two years. SMBC Nikko Securities expects pretax profits at leading companies to rise by 6% in the current fiscal year and by a further 8.3% in fiscal 2026. Nomura Securities projects a more modest increase this year, followed by stronger growth in the new business year, Kyodo News adds.

Much of the resilience in current earnings has been driven by outsized gains at SoftBank Group, whose investment funds have benefited from exposure to artificial intelligence. Excluding the technology conglomerate, profit growth this year would be far weaker, highlighting how concentrated the upside has been. Information and communications is nonetheless expected to remain the most profitable sector over the coming two years, as returns from AI-related investments continue to accumulate.

Daiwa Securities Group, which strips out SoftBank from its estimates, sees profits at major companies edging slightly lower this year before rebounding sharply in fiscal 2026. That recovery reflects expectations that the impact of US tariffs, particularly on automakers, will diminish. Although Washington sharply raised duties on Japanese car imports earlier this year, the eventual reduction in rates has eased the burden on manufacturers and reduced fears of lasting damage.

Beyond technology, analysts also see scope for broader earnings growth. Financial companies are likely to benefit from higher interest rates and stronger loan demand, while a persistently weak yen continues to support exporters. Investment linked to artificial intelligence is also expected to remain robust, with capital spending plans showing little sign of slowing.