TOKYO, May 22 (Reuters) - Japan's Nikkei share average

fell on Wednesday as investors awaited earnings from AI chip

leader Nvidia ( NVDA ), while cautious outlook of domestic firms amid

uncertainties about rate and currency moves weighed on

sentiment.

The Nikkei was down 0.57% to 38,726.33 by 0206 GMT,

while the broader Topix had fallen 0.51% to 2,745.77.

"The whole world is awaiting the result of Nvidia ( NVDA ). The

outcome will affect global stocks, particularly the U.S.

equities, which will affect Japanese stocks," said Shuji Hosoi,

senior strategist at Daiwa Securities.

Nvidia ( NVDA ), Wall Street's third-largest firm by market

capitalization, will report results after the closing bell on

Wednesday in what is likely to be a significant market catalyst

and will test whether the outsized rally in AI-related stocks

can be sustained.

Japanese chip-giants Tokyo Electron ( TOELF ) and Advantest ( ADTTF )

fell 1.67% and 0.3%, respectively. These heavyweight

chip stocks had helped the Nikkei to scale a record intraday

high of 41,087.75 on March 22.

The index has been hovering below 40,000 since the beginning

of April, partly because sentiment was dragged lower by local

companies' modest earnings forecasts, strategists said.

"Today's declines were bigger than expected. Investors,

particularly foreigners, might be selling Japanese stocks to buy

overseas stocks whose outlook is stronger," Hosoi said.

The markets are bracing for further rate hikes by the

central bank this year. Japanese government bond (JGB) yields

have risen this month on hawkish hints from the Bank of Japan as

it seeks to contain the yen's depreciation.

SoftBank Group rose 1.55% to become the biggest

support for the Nikkei. Air-conditioning maker Daikin Industries ( DKILF )

rose 1.8%.

Kusuri No Aoki Holdings rose 2.94% after Hong

Kong-based activist fund Oasis Management raised its stake in a

drug store chain.

Of the 225 components on the Nikkei, 61 stocks rose and 162

fell, while 2 were flat.

The shipping industry fell 2% to become the worst

performer among the Tokyo Stock Exchange's 33 industry

sub-indexes.