Japan’s Nikkei 225 plunged on November 6 as a global sell-off in artificial intelligence and semiconductor stocks intensified, pushing the benchmark more than 20% below its June record high. The index fell as much as 7.1% to 56,745.81 during Friday’s trading, breaking below the closely watched 60,000 level and entering territory commonly defined as a technical bear market.
The decline reflects growing investor concerns about the sustainability of the global AI investment boom, the valuations of semiconductor companies and the possibility that political and regulatory changes in the United States could slow data-centre expansion. Japan’s technology-heavy market has been particularly exposed because several of its leading listed companies are closely connected to the global AI hardware supply chain.
Nikkei Falls More Than 20% From Its June Record
The Nikkei 225’s fall on Friday extended a difficult week for Japanese equities. The index had reached a record high of 72,831.73 on June 22, 2026, supported by strong demand for technology and semiconductor-related shares.
However, the latest decline took it more than 20% below that peak. In financial markets, a fall of 20% or more from a recent high is commonly used to define a bear market.
The broader Topix index also suffered heavy losses, falling as much as 6.4% during Friday’s session. It recorded its largest decline since April 2025, when global markets were disrupted by concerns surrounding US tariff policy.
The sell-off was broad-based rather than limited to a handful of companies. Japanese investors reduced exposure to technology shares as concerns about AI-related valuations spread across global markets.
Key market movements on November 6
| Market indicator | Movement |
|---|---|
| Nikkei 225 intraday decline | As much as 7.1% |
| Nikkei 225 intraday low | 56,745.81 |
| Nikkei’s decline from June peak | More than 20% |
| Topix intraday decline | As much as 6.4% |
| Nasdaq Composite, previous US session | Down approximately 5.5% |
| S&P 500, previous US session | Down approximately 4.4% |
| Philadelphia Semiconductor Index | Down approximately 12.3% |
The figures represent reported market movements during the respective trading sessions, not necessarily closing prices.
Japanese Semiconductor and AI Stocks Lead the Decline
Technology and semiconductor-linked companies were among the biggest losers as investors unwound positions that had benefited from the AI rally.
Furukawa Electric, a cable manufacturer supplying infrastructure used in communications and data transmission, and semiconductor company Rohm both suffered sharp declines. Other Japanese companies connected to the AI hardware ecosystem also faced heavy selling.
Kioxia Holdings, a major memory-chip manufacturer, has been particularly vulnerable. The company’s shares have fallen more than 70% from their record high, reflecting the reversal in sentiment toward some of the market’s strongest AI-related performers.
SoftBank Group, a major investor in technology companies and a prominent participant in the AI investment ecosystem, also faced selling pressure.
The weakness illustrates how the AI trade has expanded beyond companies developing software and foundation models. Semiconductor manufacturers, memory suppliers, chip-testing equipment makers, optical components businesses and data-centre infrastructure providers have all attracted investor interest.
When sentiment changes, these interconnected companies can experience simultaneous declines.
Wall Street’s AI Sell-Off Spreads to Asia
The latest decline in Japan followed a sharp fall in US technology stocks. The Nasdaq Composite dropped approximately 5.5% during the previous US trading session, while the S&P 500 declined around 4.4%. Semiconductor shares experienced particularly severe losses, with the Philadelphia Semiconductor Index falling approximately 12.3%.
The sell-off was linked partly to investor concerns following the US midterm election results. Democratic victories raised speculation about tighter scrutiny of the AI industry, including potential restrictions affecting data-centre development and expansion.
Investors are also questioning whether the enormous amounts being spent on AI infrastructure will generate sufficient financial returns.
Major technology companies have committed substantial capital to data centres, advanced processors, electricity infrastructure and networking equipment. These investments are intended to support growing demand for AI computing, but the returns may take years to materialise.
If investors begin to believe that infrastructure spending is expanding faster than commercial demand, companies connected to the AI supply chain could face lower valuations.
Japan’s market is especially sensitive to these developments because its semiconductor and electronics companies are deeply integrated into global technology manufacturing.
South Korea and Taiwan Also Face Heavy Selling
The pressure was not restricted to Japan. Other Asian markets with significant exposure to semiconductor manufacturing and technology exports also experienced steep declines.
South Korea’s Kospi fell as much as 8.8% during the sell-off, with major semiconductor companies including Samsung Electronics and SK Hynix facing pressure.
Taiwan’s Taiex also moved toward bear-market territory, falling approximately 20% from its recent peak.
These markets have benefited from the expansion of AI infrastructure because their companies supply memory chips, advanced semiconductor components and other essential hardware.
However, the same exposure has become a vulnerability as investors reassess the outlook for AI-related spending.
The regional decline suggests that the latest market correction is not simply a Japan-specific event. It reflects a wider reassessment of technology valuations across Asia.
Investors Move Towards Safer Assets
As equities declined, investors increased their interest in safer assets, including Japanese government bonds.
Japan’s five-year government bond yield fell during Friday’s trading as demand for bonds increased. Bond yields generally move in the opposite direction to bond prices, so falling yields indicate rising demand for existing bonds.
The Japanese yen also strengthened against the US dollar during the session, crossing the 158-per-dollar level, according to Moneycontrol’s report.
These movements suggest that investors were reducing risk exposure and seeking protection against further volatility in technology markets.
However, a shift towards safer assets does not automatically indicate that investors expect a prolonged economic downturn. It can also reflect short-term portfolio adjustments during periods of unusually sharp market movements.
Is the AI Investment Boom Coming to an End?
The latest market decline has raised a broader question about whether the AI rally is approaching its end or simply experiencing a temporary correction.
Investors have poured money into companies expected to benefit from the growth of AI computing. The resulting share-price gains have been substantial, particularly among semiconductor manufacturers and businesses supplying data-centre infrastructure.
But rising valuations have increased the consequences of disappointing earnings, slower infrastructure development or weaker-than-expected demand.
Another concern is the concentration of investor portfolios in a relatively small group of technology companies. When these stocks decline together, funds with significant exposure may be forced to reduce positions to manage risk.
Some market strategists believe the sell-off could eventually create opportunities in companies whose underlying business performance remains strong. Others warn that volatility could continue until investors have greater clarity about AI spending, regulation and future earnings.
Importantly, the Nikkei’s entry into bear-market territory does not mean that Japan’s entire economy has entered a recession or that every listed company is experiencing deteriorating fundamentals.
Despite the correction, the Nikkei remained up approximately 14% year-to-date in the November 6 market report, illustrating how sharply the index had risen before the latest decline.
The Bigger Picture
Japan’s market correction highlights the risks of concentrated investment themes. AI has created significant opportunities for semiconductor manufacturers, memory-chip suppliers and data-centre infrastructure companies. However, when investor expectations become too optimistic, even strong businesses can experience substantial share-price declines as valuations adjust.
The sell-off also demonstrates how closely connected global equity markets have become. A sharp fall in US technology stocks can quickly affect Japanese, South Korean and Taiwanese companies because their businesses depend on the same global AI investment cycle. The next phase of the correction will depend on corporate earnings, infrastructure spending plans, regulatory developments and whether investors regain confidence in the long-term returns from AI.
Looking Ahead
Investors will closely monitor the performance of semiconductor companies, updates from major technology businesses and developments in US AI policy. If data-centre investment continues to expand and demand for advanced chips remains strong, some of the recent losses could eventually reverse. However, further concerns about infrastructure costs, financing and the profitability of AI services could keep technology shares under pressure.
For Japan, the immediate challenge is determining whether the latest decline represents a temporary correction after a powerful rally or the beginning of a longer adjustment in technology valuations. The Nikkei’s fall of more than 20% from its June peak is an important technical milestone, but it does not by itself establish how long the downturn will last. Investors will need evidence of sustainable earnings growth and continued demand before confidence in the AI-related rally can fully recover.
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