Japan's Nikkei slumps up to 3% as tech stocks tumble on AI worries
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TOKYO, Oct 30 : Japan's Nikkei share average dropped as much as 3 per cent on Friday, led by chip-related stocks, as concerns mounted over the sustainability of spending to fund the AI boom.
Tokyo tracked overnight losses on Wall Street, given additional impetus by late earnings from Amazon.com and Intel that showed massive cash burns, sending shares of those companies and their peers sharply lower in extended trading.
"This can be seen as a sign of growing concerns regarding the profitability of AI investments, which is weighing on share prices," said Maki Sawada, an equities strategist at Nomura Securities.
The market was largely unmoved by the Bank of Japan's surprise announcement that it would accelerate the pace of its sales of exchange-traded funds from January, as the central bank held interest rates steady in a widely expected move.
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The Nikkei sank 2.1 per cent to 63,290.11 as of the close of trading, after earlier slumping 3 per cent, led lower by chip equipment heavyweights Advantest and Tokyo Electron, which dropped 5.9 per cent and 5.2 per cent, respectively.
Trading has been volatile this week as earnings reports from Japan, the US and South Korea triggered sharp swings in technology stocks.
For the week, the Nikkei managed to gain 1 per cent.
By contrast, the broader Topix was down a milder 1 per cent on Friday, but flat for the week.
Beyond earnings, falling crude oil prices on optimism over Middle East peace talks supported Japanese stocks. Resource-poor Japan depends heavily on energy imports, especially from the Middle East.
Among the Nikkei's 225 components, 123 fell versus 100 that rose, with two trading flat.
Along with Advantest and Tokyo Electron, other notable chip and AI losers included Ibiden, down 15.2 per cent, Lasertec, down 8.8 per cent, and SoftBank Group, down 6 per cent.
Earnings also produced some standout performers, with game maker Konami jumping 15 per cent to be the Nikkei's biggest percentage gainer. Oriental Land, the operator of Tokyo Disney Resort, followed with an 8.5 per cent gain.
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