Global Markets: Japan's Nikkei pulls back from record high on AI selloff

Japan's Nikkei share average slid the most in three weeks on Thursday, pulling back from a record high as investors sold AI-related stocks after Broadcom missed second-quarter revenue expectations, while renewed fighting between the U.S. and ‌Iran ⁠also soured ⁠risk sentiment.

The Nikkei fell 1.36% to close at 67,470.69, the steepest drop since May 15. The broader Topix dropped 1.11% to 3,951.85. The drop comes a day after the Nikkei closed above the 68,000 level for the first time. However, Wall Street tumbled overnight, with the S&P 500 ⁠falling 0.7% ‌and oil prices rising around 2% as hostilities in the Middle East erupted anew, and talks ⁠between Tehran and Washington showed little progress.

Broadcom shares fell more than 13% in extended trading following its disappointing results.


On the Nikkei on Thursday, technology investor SoftBank Group tanked 11.3% and was the top drag for the index. The investor was also the index's biggest percentage loser.

Data centre material makers fell, ‌with Ibiden and Fujikura slipping 8.1% and 3.9%, respectively.

The sharp decline of Broadcom prompted the market to sell chip-related shares, ⁠said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.

"But fundamentals for chip-related shares remain strong. These shares, along with AI-related stocks, will continue to be investors' targets," Yasuda said.

Bucking the trend, chip-making equipment maker Tokyo Electron rose 4.5%. The stock was the biggest support for the Nikkei. Chip designer Disco jumped 5.1%.