Japan's Nikkei falls more than 2% on AI spending worries

TOKYO: Japan’s Nikkei share average fell more than 2% on Friday, as a sharp decline in ​Google parent Alphabet shares spurred concerns about heavy AI ‌spending.

The Nikkei was down 2.69% at 64,634.04 as of 0112 GMT, while the broader Topix slipped 1.28% to 4,002.09.

The Nikkei has lost more ​than 7% 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% 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%.

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% and 5.43%, respectively.

Technology investor SoftBank Group fell 7.42% and ​memory chip maker Kioxia lost 4.4%.

Shares supported by ​domestic ⁠demand rose, with Central Japan Railway and East Japan Railway rising 1.17% and 0.6%, respectively.

Shippers rose, with Kawasaki Kisen and Mitsui ⁠OSK ​Lines up 0.61% and 0.88%, respectively.

Otsuka Holdings, ​a maker of Pocari Sweat, rose 1.6% to become the top percentage ​gainer on the Nikkei.