In 2025, the AI and defense sectors are experiencing a surge in popularity, with stocks like Kioxia (Japan) and Zhongji Innolight (China) soaring. GE Vernova's shares have more than doubled this year. This trend is driven by the artificial intelligence boom and geopolitical risks favoring defense companies. However, this surge has sparked debates about the sustainability of these gains and the potential risks associated with the AI and defense industries. Critics argue that the rapid rise in stock prices may be unsustainable, while others highlight the ethical and security concerns surrounding defense companies. Despite these controversies, the AI and defense sectors continue to attract investors, with foreign investors buying a net $38 billion in Japanese stocks, hitting a 12-year high. The question remains: can these sectors maintain their momentum in the long term, or are they just a short-term bubble?
