Japan's Nikkei Tumbles Over 5% as AI Stock Selloff Spreads Across Asia

A sharp selloff in U.S. semiconductor stocks triggered a wave of selling across Asian technology markets on Friday, with Japan's Nikkei 225 leading the declines. The index slumped more than 5% to reach its lowest level since June 11, as investors unwound positions in popular artificial intelligence-related trades.

Widespread Declines Across Asia

The selloff was broad-based, impacting major markets across the region, while South Korean markets were closed for a public holiday. In Japan, the Nikkei 225 was dragged down by significant losses in its heavyweight technology and electronics manufacturing sectors.

Greater China also saw steep losses. The CSI 1000 index, which tracks small and mid-cap Chinese stocks, fell more than 3% to its lowest point since March 24. In Hong Kong, the Hang Seng Index declined by over 2%, weighed down by its technology constituents.

AI and Chip Stocks Lead the Retreat

Specific companies at the center of the AI boom bore the brunt of the selling pressure. Key stock movements included:

• In Japan: Memory producer Kioxia Holdings Corp. plunged more than 16%, while electronics component maker Murata Manufacturing Co. tumbled nearly 12% and TDK Corp. fell over 6%.
• In China: AI chip designer Cambricon Technologies Corp. dropped more than 5.6%, and Foxconn Industrial Internet Co. lost over 5%.
• In Hong Kong: Tech giants Meituan and Kuaishou both fell approximately 6%, while Tencent Holdings, Baidu, and Alibaba Group all saw declines between 2% and 4%.

Ad

US Tech Rout Sets the Tone

The downturn in Asia followed a sharp retreat in U.S. technology stocks overnight. Investors dumped many of the year's top-performing AI-linked stocks, signaling a rotation away from high-multiple growth names. Memory and storage makers were hit particularly hard, with Western Digital and Seagate each losing more than 9%, while chipmakers Intel and Micron dropped about 6%.

Adding to the negative sentiment, IBM suffered one of its largest single-day declines after it warned that corporate customers were redirecting spending toward AI infrastructure, impacting other areas of its business.

Long-Term Outlook Remains Constructive

Despite the sharp selloff, some analysts maintain a positive long-term view. In a research note, ANZ said the global semiconductor supercycle "is not showing signs of stopping yet." The bank argued that the ongoing AI investment boom should continue to support Asia's growth outlook through the second half of the year, citing an acceleration in the Global Electronic Computing PMI.