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Reuters reported that Japan’s Nikkei share average closed more than 2 percent lower on Friday as a sharp decline in shares of Google parent Alphabet spurred fresh concerns about the sustainability of heavy spending on artificial intelligence. The benchmark fell 2.73 percent to end at 64,611.15 although it posted a 0.7 percent gain for the week after a 6.4 percent drop in the prior session. The broader Topix index slipped 1.05 percent to close at 4,011.31 according to the same market data.
The Nikkei has lost nearly 8 percent so far this month tumbling into correction territory last week Reuters figures show. Its movements have been closely tied to the tech-heavy South Korean benchmark KOSPI and the U.S. Philadelphia semiconductor index. Alphabet shares sank 7 percent overnight after the company detailed higher spending plans while burning through cash Reuters stated.
Wall Street indexes closed lower with the Nasdaq shedding more than 2 percent in the previous session according to Reuters. Concerns resurfaced over whether heavy spending on AI infrastructure is sustainable Kazuaki Shimada chief strategist at IwaiCosmo Securities told the wire service. Shimada added that the index has been affected by overseas factors rather than local cues with many Japanese companies due to begin earnings reports that could influence future trends if outlooks prove strong.
Similar declines have appeared multiple times in 2026 with tech-linked selloffs repeatedly pressuring the Nikkei Reuters assessments found. In one prior instance the index dropped as much as 2 percent while tracking valuation worries among artificial intelligence leaders on Wall Street. These patterns underscore the influence of U.S. market moves on Japanese equities where semiconductor and software-related firms hold significant weight.
SoftBank Group and Advantest figured among notable decliners in recent parallel sessions though specific contributions to the July 24 move were not isolated in initial tallies. The Philadelphia semiconductor index has served as a key barometer for sentiment in the region with parallel drops amplifying losses in Tokyo. Market breadth on the day showed more decliners than advancers across the Nikkei 225.
Upcoming corporate results from Japanese firms are expected to provide further direction for the benchmark in the weeks ahead according to strategists cited by Reuters. Investors have shown increased caution toward stretched valuations in the artificial intelligence sector after several quarters of rapid gains. The Nikkei had recorded strong monthly performances earlier in the year before the latest bout of volatility set in.
