Japan's Nikkei slides as investors book profit on tech stocks

Japan's Nikkei share average sank on Friday, as tech stocks tracked Wall Street peers' overnight losses amid mounting concerns over sky-high valuations.

The Nikkei fell 1.8% to end the day at 50,376.53. The broader Topix lost 0.7% to 3,359.81.

Artificial intelligence-linked firms led the drop, with chip-testing equipment maker Advantest falling 5.5%, startup investor SoftBank Group sliding 6.6% and chip-making tool manufacturer Tokyo Electron shedding 6.1%.


Stocks linked to data centre expansion also retreated, with Hitachi and Fujikura down 5% and 6.4%, respectively.

"It looks like investors are taking profits on these AI-related stocks," as worries about stretched valuations simmer, said Nomura Securities strategist Fumika Shimizu.

"We are seeing a bit of sector rotation," particularly into companies that have posted strong earnings this season, she added.

Paper company TOPPAN Holdings soared 14% and property developer Tokyo Tatemono jumped 10.4% on robust financial results, becoming the Nikkei's two biggest percentage gainers on the day.

The majority of the Nikkei's 225 components gained, with 121 advancers versus 101 decliners. Three ended flat.

The Nikkei eked out a 0.2% advance for the week, kept afloat by Monday's 1.3% rally, which helped the index retrace part of last week's more than 4% slide.

Valuation worries around the AI narrative have driven dips in shares globally all month.

A flashpoint could come next week, with AI bellwether Nvidia reporting earnings on Wednesday.