Nikkei 225 Drops as AI Investment Concerns Hit Tech Stocks

The Nikkei 225 Index fell 2.41 percent to 63,099.07 on Friday, ending a three-session winning streak. The decline was driven by a slump in chip-related and technology stocks, with the index dropping as much as 3 per cent during the session. The sell-off followed overnight losses on Wall Street, where the Nasdaq tumbled 1.4 percent, and earnings reports from Amazon.com and Intel that revealed significant cash expenditures. These reports sparked investor concerns regarding the profitability and sustainability of artificial intelligence investments.

Major chip equipment companies Advantest and Tokyo Electron saw sharp declines, while Fujitsu plummeted nearly 16 percent and SoftBank Group dropped more than 6 percent. In contrast, Konami Group surged over 18 percent and Oriental Land recorded gains. The broader Topix experienced a milder decline of 1.3 per cent, while falling crude oil prices amid Middle East peace optimism further influenced market volatility.

Economic data showed Japan's unemployment rate decreased to 2.4 percent in September, and industrial production grew by 2.2 percent month-over-month. However, September retail sales grew 2.3 percent year-on-year, a figure that fell below market expectations. Investors are currently awaiting a policy decision from the Bank of Japan, which is expected to maintain its benchmark lending rate at 1.25 percent.