An obscure gauge of market distortion, the NT ratio that pits the price‑weighted Nikkei 225 against the market‑cap‑weighted Topix, hit a fresh high last week. At 16.37 times – the strongest reading since the metric was first compiled in 1970 – the ratio eclipsed the 16‑times mark as the Nikkei hovered near 62,000 points and the Topix close to 3,900.

The surge stems from a wave of foreign money chasing AI‑linked exposure outside the United States. Government data show overseas investors bought ¥8.8tn ($55.7bn) of Japanese equities since early April, concentrating on large‑cap tech names such as SoftBank, Tokyo Electron, Advantest and TDK that dominate the Nikkei. Those stocks have propelled the index 65% higher year‑to‑date, outpacing both the S&P 500 and Nasdaq even after currency adjustments.

Strategists see the widening gap as a proxy for a K‑shaped market, where AI‑related giants attract capital while the broader 1,700‑stock Topix lags at an 11.5% gain this year. Nomura’s Tomochika Kitaoka warns the current level appears overheated, suggesting the ratio could stay elevated for months. For investors, the message is clear: Japanese large‑cap tech offers the most visible AI play, but diversification beyond the Nikkei remains limited.