Nikkei Drops Over 2% as Alphabet Selloff Fuels AI Spending Concerns

Japan’s Nikkei share average fell more than 2% on Friday, dragged down by a sharp overnight decline in Alphabet shares that reignited investor worries about heavy AI infrastructure spending. The index dropped 2.7% to 64,634.04, while the broader Topix slipped 1.28% to 4,002.09.

The Nikkei has now lost more than 7% this month, having slipped into correction territory last week. Its recent moves have closely tracked overseas indicators, including South Korea’s KOSPI and the US Philadelphia semiconductor index.

Semiconductor related shares bore the brunt of the selloff in Tokyo, with Advantest falling 6.33% and Tokyo Electron dropping 5.43%.

What Analysts Are Watching Next

Analysts noted the index has largely been driven by overseas factors rather than domestic developments. With Japanese companies beginning to report earnings, strong outlooks from local firms could shift the market’s current trajectory.