Nikkei 225 Index Sinks as AI Stocks Rout Spreads From Nasdaq to Tokyo

The Nikkei 225 became the clearest stress point in the global index market on Friday as the AI-led equity selloff that hit Wall Street spilled into Tokyo. Japan’s benchmark index dropped sharply in early trading, with losses reported at more than 5% and at times around 6%, as investors cut exposure to semiconductor, data center and other technology-linked shares.

The move followed a bruising Thursday session in the United States, where the Nasdaq Composite fell more than 5% and the S&P 500 posted its steepest one-day decline since April 2025. The speed of the reversal underlined how concentrated the latest bull-market leadership had become around AI infrastructure and chip demand.

Tokyo takes the global index spotlight

The Nikkei 225 fell below the 60,000 area for the first time in roughly half a year during the selloff, turning the Japanese index into a barometer for how far the AI unwind can travel beyond Wall Street. Losses were broad, with only a handful of index constituents resisting the downward pressure as traders moved to reduce cyclical and technology exposure.

Heavyweight chip-equipment and technology names were among the hardest hit, reflecting worries that AI spending growth may face more scrutiny after the U.S. midterm elections. The market reaction was not limited to Japan, but Tokyo’s concentration of semiconductor supply-chain leaders made the Nikkei 225 especially vulnerable to a reassessment of high-valuation AI trades.

Nasdaq pressure challenges risk appetite

The Nasdaq’s drop into correction territory has changed the tone for global index traders. Until this week, many investors were willing to look through elevated valuations because earnings momentum in AI-linked companies remained strong. Friday’s action suggested that the market is now demanding more proof that data center spending can keep rising without squeezing balance sheets or profit margins.

Falling Treasury yields offered only limited support to equities. Normally, lower yields can help growth-stock valuations, but the latest decline in yields was tied to defensive demand rather than a clean improvement in the macro outlook. That distinction matters for the Nikkei 225 because Japan’s technology exporters often need both firm global demand and stable risk appetite to sustain premium valuations.

What traders watch next

The immediate test for the Nikkei 225 is whether dip buyers return near key technical levels or whether the index continues to track weakness in U.S. technology benchmarks. A stabilization in Nasdaq futures would help, but traders may remain cautious if selling pressure stays concentrated in chipmakers and AI infrastructure names.

For now, the index-market story has shifted from post-election rotation to global contagion risk within the AI trade. If the Nikkei 225 can hold above its recent lows, the selloff may look like a valuation reset. If it breaks lower alongside renewed Nasdaq weakness, investors could start treating the move as a broader de-risking phase across global equity benchmarks.