Japan's Nikkei 225 dropped 5% on Monday, dragged down by a wave of selling in chipmaker and artificial intelligence stocks. The losses were led by SoftBank, Tokyo Electron, and Advantest, as the selloff spread across global tech markets.
Chip stocks take the hardest hit
SoftBank Group, the investment conglomerate with heavy exposure to tech startups, saw its shares tumble. Tokyo Electron, a major supplier of semiconductor manufacturing equipment, was among the biggest decliners. Advantest, which makes chip-testing gear, also suffered steep losses. The three companies are key players in the AI supply chain, and their declines reflected a broader reassessment of the sector's valuations.
Global tech rout deepens
The Nikkei's slide was part of a larger selloff in technology shares worldwide. Investors have been pulling back from the sector after a long rally, driven by concerns about overvaluation and slowing growth in AI-related businesses. The rout hit Asian markets hard, with Japan's benchmark index bearing the brunt of the selling pressure.
Monday's drop wiped out billions of dollars in market value. The Nikkei 225, which had been trading near record highs earlier this year, now sits well below those levels. The selloff was broad, but tech and chip stocks led the way down.
What's behind the selling
No single catalyst triggered the decline. Instead, the market appears to be repricing risk after months of optimism around AI and semiconductors. SoftBank, Tokyo Electron, and Advantest had all rallied sharply in 2024, making them vulnerable to profit-taking. The global tech rout accelerated as investors rotated out of high-growth names and into defensive sectors.
The 5% plunge is one of the Nikkei's worst single-day drops this year. Trading volumes were heavy, with sellers outpacing buyers throughout the session. Analysts noted that the selloff was orderly, not a panic, but it underscored the market's sensitivity to tech stock movements.
The losses come as global markets grapple with a tech rout. Investors will be watching for further volatility when Asian markets resume trading on Tuesday.
