Japan's Nikkei slides over 2% as AI spending worries hit markets

Japan’s Nikkei share index fell 2.69% to 64,634.04 on Friday, while the broader Topix slipped 1.28% to 4,002.09. The decline was sparked by a 7% plunge in Alphabet shares after the company announced higher AI‑related capital spending, renewing concerns about the sustainability of heavy AI investment.

Chip‑related stocks led the sell‑off, with Advantest down 6.33% and Tokyo Electron off 5.43%. Technology investor SoftBank lost 7.42% and memory‑chip maker Kioxia dropped 4.4%. By contrast, some domestic‑demand firms such as Central Japan Railway and East Japan Railway rose modestly. The market backdrop included broader tech weakness from South Korea’s KOSPI and U.S. semiconductor indices, rising oil prices amid Middle‑East tensions, and upcoming monetary‑policy meetings of the Bank of Japan and the U.S. Fed.

Analysts noted that many Japanese companies were about to release earnings, which could shift the index’s trajectory if outlooks improve. The broader narrative linked AI‑spending anxieties, a slowdown in AI‑memory production by SK Hynix, and geopolitical risks to the observed volatility in Japan’s equity markets.