Artificial intelligence and semiconductor stocks traded lower before Friday's opening bell as weakness in Japan's technology sector and fresh competition from Chinese AI developers weighed on investor sentiment.
Japan's Nikkei 225 dropped 4.03%, marking its steepest weekly decline since April 2025, while the broader Topix lost 2.72%. Technology shares led the retreat, with memory maker Kioxia falling nearly 16%, while Tokyo Electron and Advantest declined about 8% and 7%, respectively.
In U.S. premarket trading, Nvidia NASDAQ:NVDA fell about 2%, Advanced Micro Devices NASDAQ:AMD and Cerebras NASDAQ:CBRS each lost around 3%, while Micron Technology (MU) slipped nearly 2%. Western Digital NASDAQ:WDC and Seagate Technology NASDAQ:STX declined about 3%, and Taiwan Semiconductor Manufacturing NYSE:TSM dropped nearly 4% despite reporting stronger-than-expected quarterly results a day earlier.
Meanwhile, Alibaba-backed Moonshot AI introduced Kimi K3, which it described as a 2.8 trillion-parameter open-weight AI model designed to compete with leading U.S. systems. The launch underscores growing competition from Chinese AI developers as investors assess the outlook for AI-related semiconductor companies.