The Nikkei 225 Index fell 1.5% to below 67,800 on Friday, extending losses for a second consecutive session as technology stocks remained under pressure amid concerns that the artificial intelligence-driven rally has outpaced underlying fundamentals.
Investors questioned whether heavy spending and intensifying competition in the AI sector can support elevated valuations and deliver sustainable profits.
Japanese firms tied to the global AI infrastructure buildout posted another day of steep losses, including Kioxia Holdings (-4.6%), Taiyo Yuden (-8.5%), Tokyo Electron (-3.4%), Murata Manufacturing (-5.2%), and Fujikura (-5%).
Domestic equities also weakened as the yen rallied nearly 1% on Thursday, fueled by speculation that Japanese authorities could intervene in the currency market at any time.