Japan's Nikkei falls more than 2% on AI spending worries
TOKYO, July 24 : Japan's Nikkei share average fell more than 2 per cent on Friday, as a sharp decline in Google parent Alphabet shares spurred concerns about heavy AI spending.
The Nikkei was down 2.69 per cent at 64,634.04 as of 0112 GMT, while the broader Topix slipped 1.28 per cent to 4,002.09.
The Nikkei has lost more than 7 per cent so far this month, tumbling into correction territory last week. Its moves have been heavily affected by the tech-heavy South Korean benchmark KOSPI and the U.S. Philadelphia semiconductor index.
Shares of Alphabet sank 7 per cent overnight after the company reported higher spending plans while it also burned cash. Wall Street indexes closed lower, with the Nasdaq shedding more than 2 per cent.
Concerns resurfaced over whether heavy spending on AI infrastructure is sustainable after Alphabet shares fell sharply overnight, said Kazuaki Shimada, chief strategist at IwaiCosmo Securities.
"The (Nikkei) index has been affected by overseas factors, not local cues. Many Japanese companies will start reporting their earnings from today, and if their outlook is strong, the index's trend may change," said Shimada.
Chip-related shares fell, with Advantest and Tokyo Electron losing 6.33 per cent and 5.43 per cent, respectively.
Technology investor SoftBank Group fell 7.42 per cent and memory chip maker Kioxia lost 4.4 per cent.
Shares supported by domestic demand rose, with Central Japan Railway and East Japan Railway rising 1.17 per cent and 0.6 per cent, respectively.
Shippers rose, with Kawasaki Kisen and Mitsui OSK Lines up 0.61 per cent and 0.88 per cent, respectively.
Otsuka Holdings, a maker of Pocari Sweat, rose 1.6 per cent to become the top percentage gainer on the Nikkei.
