Global Markets | Japan's Nikkei weighed down by AI stocks ahead of Nvidia earnings

Japan's Nikkei share average slid on Monday, with artificial intelligence-related shares under pressure ahead of Nvidia earnings later in the week.

The market was also weighed down by inflation worries amid continued uncertainty in the Middle East, with investors and analysts expecting the Bank ‌of Japan ⁠to ⁠raise interest rates at its next policy meeting in September.

The Nikkei ended ​the day down 0.7% at 65,528.09.


Most AI-related shares, which tend to be ​heavily weighted on the Nikkei, declined, with Fujikura losing 5%, Advantest dropping 3.9% and SoftBank Group slipping 5.3%

Chip-making tool manufacturers outperformed, though, ​with Tokyo Electron rising 1.6%.

The broader Topix inched ⁠up 0.2%.

AI ‌shares slumped in other Asian markets as ​well, with ​South Korea's Samsung Electronics tumbling around 9% to lead ⁠the KOSPI 3.1% lower. China's Alibaba plunged as much ​as 10.5% after launching a $10 billion share placement.

U.S.-based ​Nvidia has notified some of its largest customers that AI server prices will rise by more than 15% amid soaring memory costs, Bloomberg reported on Saturday. The company announces financial results on Wednesday.

"We view the concerns over the profitability of semiconductor-related companies - ‌led by Nvidia - as little more than a pretext or trigger for selling" following "a significant build-up of open ​positions in ​margin trading recently", ⁠said Wataru Akiyama, an equities strategist at Nomura Securities.

"I think it is fair to say that the outlook for earnings growth in AI and semiconductor-related stocks has not changed."

At the same time, with bond yields rising as a result of building inflation worries, "it does not appear that the Japanese stock market is currently in a position to sustain an upward trend", he added.