Global Market: Japan’s Nikkei plunges over 4% as chip stocks track global tech selloff

Japan’s Nikkei share average tumbled more than 4% on Tuesday to its lowest level in two months, dragged down by heavy losses in chip-related stocks as investors turned cautious ahead of major technology companies’ earnings reports.

The Nikkei fell 4.34% to 62,112.91 by 0223 GMT, while the broader Topix index declined 2.76% to 3,953.88.

The sharp decline was led by artificial intelligence-related stocks, which extended losses after a selloff in U.S. technology shares. However, market participants viewed the weakness as a correction in high-flying technology names rather than a reflection of Japan’s broader economic outlook.


According to Reuters, investors remained focused on upcoming earnings from major technology companies in Japan and the United States, with hopes that stronger outlooks could revive buying interest in beaten-down AI-linked stocks.

The global technology selloff intensified after Nvidia shares dropped 4.9% overnight, while the Philadelphia Semiconductor Index fell another 2.2%. The index has declined 21% from its record closing high on June 22, though it remains up 63% in 2026.

South Korea’s benchmark KOSPI also plunged 9% on Tuesday, adding to pressure on Asian technology stocks. The Nikkei’s recent moves have been closely tied to trends in the U.S. semiconductor index and South Korea’s technology-heavy market.

Japanese chip-related companies saw steep losses, with memory chip maker Kioxia sliding 18%. Semiconductor equipment makers Advantest and Tokyo Electron each dropped around 10%.

The Nikkei has now fallen more than 14% from its record high reached in mid-June, as concerns over aggressive artificial intelligence spending by global technology companies have weighed on valuations of chip-related firms, Reuters reported.

Investors had recently shifted towards value-oriented sectors such as banks, which benefited from expectations that the Bank of Japan could raise interest rates sooner. However, financial stocks also came under pressure on Tuesday, with Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group both declining more than 3%.

Amid the broader market weakness, some software and computer-related stocks bucked the trend. Shift and Fujitsu gained nearly 4% each, while Nomura Research Institute rose 2.5%.

On the Tokyo Stock Exchange’s Prime Market, around 70% of more than 1,500 listed stocks declined, while 28% advanced and 1% remained unchanged, highlighting the broad-based nature of the selloff.

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