The Nikkei 225 rose 2.68 percent to a record close of 63,339.07 amid reinforced momentum in AI- and semiconductor-related stocks following Nvidia's strong earnings.
SoftBank Group surged more than 12 percent intraday after a near 20-percent jump in the previous session — the biggest one-day gain since February 2000 — on expectations surrounding Arm Holdings and a potential OpenAI IPO.
AI-related shares also rallied strongly, with factory automation firm Fanuc climbing 6.61 percent, Kawasaki Heavy Industries gaining 4.48 percent and electronic components maker Taiyo Yuden soaring 11.74 percent to a record high on expectations for rising AI server demand.
China's Shanghai Composite also ended 0.87 percent higher at 4,112.90, while Hong Kong's Hang Seng Index was trading up 0.85 percent at 25,602.66.
Korea's benchmark KOSPI swung sharply throughout the session before closing 0.41 percent higher at 7,847.71. The index briefly fell below 7,800 in early trading before rebounding above 7,860. Retail investors bought a net 1.07 trillion won worth of local shares, while foreigners sold a net 1.92 trillion won. Institutional investors bought a net 758.3 billion won.
The junior KOSDAQ surged 4.99 percent to 1,161.13, triggering buy-side sidecar curbs for a second consecutive session as growth and speculative shares rallied sharply.
Investor sentiment was boosted by the launch of the "National Growth Fund," a state-backed investment program aimed at channeling household savings into AI and other strategic industries.
Online allocations at several brokerages sold out within minutes after subscriptions opened Friday morning, reinforcing expectations that the fund would primarily benefit smaller KOSDAQ-listed technology and venture firms, while boosting buying interest in biotech, AI, semiconductor equipment and secondary-battery shares.
Secondary-battery stocks EcoPro BM and EcoPro climbed 10.77 percent and 12.87 percent to close at 216,000 won and 146,500 won, respectively, while semiconductor equipment maker Jusung Engineering surged 20.95 percent to 224,000 won.
Biotech shares also rallied broadly, with HLB jumping 8.76 percent to 50,900 won, ABELBIO rising 9.37 percent to 120,200 won and LigaChem Biosciences gaining 12.83 percent to 157,400 won.
The divergence between the two benchmarks widened as Samsung Electronics and SK hynix lost momentum following weeks of steep gains tied to the global AI rally.
Samsung Electronics fell 2.34 percent to 292,500 won after hitting a record intraday high of 300,500 won, while SK hynix edged up 0.05 percent to 1,941,000 won.
Other major KOSPI names traded mixed. Auto shares weakened, with Hyundai Motor falling 1.65 percent to 655,000 won and Kia declining 1.85 percent to 164,800 won amid profit-taking pressure following recent gains.
By contrast, electronics and industrial shares advanced. Samsung Electro-Mechanics surged 11.30 percent to 1,340,000 won, while HD Hyundai Heavy Industries rose 1.19 percent to 680,000 won and Hanwha Aerospace gained 1.04 percent to 1,261,000 won.
Financial and holding company shares also strengthened, with KB Financial rising 2.70 percent to 160,000 won, Samsung Life Insurance adding 2.68 percent to 364,500 won and SK Inc. jumping 11.46 percent to 642,000 won.
Among battery and biotech names on the main board, Samsung SDI climbed 5.03 percent to 647,000 won and Samsung Biologics gained 1.43 percent to 1,415,000 won.
Despite the relatively muted finish for the KOSPI, intraday volatility remained elevated as investors rotated out of large-cap semiconductor names and into smaller policy-driven momentum plays linked to the government fund theme.
The dollar-won exchange rate retreated to 1,517.2 won on verbal intervention from authorities after crossing 1,580 won earlier in the day as foreign equity selling extended for a 12th straight session.
In a joint statement, South Korea's Ministry of Economy and Finance and Bank of Korea said they were closely monitoring the market and would take decisive action if needed.
The Seoul markets are closed Monday for Buddha's Birthday.
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