Nikkei enters bear market as AI-related stocks sell off sharply

what happened

Japan's Nikkei 225 entered bear market territory on Friday as a selloff in AI-related shares wiped $2.5 trillion from the tech-heavy Nasdaq 100. The Nikkei fell 6% and closed below 60,000 for the first time since May, sitting 20% under its June peak.

After Democrats' sweeping midterm victory in the U.S., investors feared data center construction could slow. Nathan Peterson, director of derivatives research and strategy at Schwab Center for Financial Research, said that questions over future funding for the AI infrastructure buildout had already weighed on sentiment, and the election result added to that concern.

Tokyo-listed SoftBank shares sank nearly 11%, and memory chipmaker Kioxia fell 8.7%. In Seoul, the Kospi briefly dipped below 5,000 for the first time in nine months before closing 6% lower. Taiwan's TAIEX ended 4.5% down and also entered bear market territory, while TSMC, which makes up over 40% of the index, dropped 5%. According to Seeking Alpha, Saxo analysts linked the selloff to concerns about tighter U.S. regulation and weaker memory chip demand.

why it matters

The move signals that expectations for AI infrastructure are being repriced across several Asian markets at once. Chipmakers and memory producers depend on data center orders, so any slowdown in that buildout hits the region's semiconductor sector broadly.

market impact

Asian indices and chipmakers: pressure from concerns over AI infrastructure spending

• ▼Nikkei 225 pressure down — worries about AI infrastructure demand weigh on tech shares
• ▼TSMC pressure down — its heavy weight in TAIEX and reliance on AI chip orders
• ▼Kospi pressure down — SK Hynix and Samsung losses on weaker memory chip demand

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