Tokyo: Asian stock markets suffered heavy losses on Friday as concerns about artificial intelligence investments triggered a major sell-off in technology shares across global financial markets. Japan's Nikkei 225 and South Korea's KOSPI recorded sharp declines, while the pressure spread to other major markets in the region.
Japan's Nikkei 225 closed at 57,434.77 points, falling 6.0 per cent during the session. The decline took the index below 60,000 points and marked its biggest percentage fall since April 2025. Technology and semiconductor companies experienced some of the heaviest losses as investors reduced their exposure to shares that had benefited from the rapid growth of artificial intelligence.
South Korea also experienced intense selling pressure. The country's benchmark KOSPI closed at 5,059.69 points, down 6.02 per cent. Earlier in the session, the index had fallen as much as 8.8 per cent, prompting the Korea Exchange to temporarily suspend trading for 20 minutes. The circuit breaker was activated at 9.03 am local time. It was the tenth time the trading protection mechanism had been activated during 2026.
The market turmoil followed a severe decline on Wall Street on Thursday, where technology companies faced substantial losses. The S&P 500 fell 4.4 per cent, while the Dow Jones Industrial Average declined 3.4 per cent. The Nasdaq Composite, which has a large concentration of technology companies, dropped 5.5 per cent and entered correction territory after falling more than 10 per cent from its recent record.
Several major technology companies were among the biggest losers. Shares in artificial intelligence chipmaker Nvidia fell 9.3 per cent, while Advanced Micro Devices dropped 17.3 per cent. Other companies connected to artificial intelligence infrastructure also experienced significant declines as investors reconsidered the value of their investments in the sector.
The latest market turmoil reflects growing concerns about the huge sums technology companies are spending on artificial intelligence. Major companies have invested heavily in advanced computer chips, data centres, cloud computing facilities and other infrastructure needed to develop and operate AI systems.
Although the technology has attracted strong interest and investment, investors are increasingly questioning whether the financial returns will justify the high costs. Building and operating large data centres requires substantial funding, electricity and computing equipment. Higher borrowing costs can also make these projects more expensive.
These concerns have raised questions about whether some artificial intelligence companies have become overvalued and whether expectations about future growth have been too optimistic. However, the recent market losses do not establish that the artificial intelligence industry has entered a long term decline.
Political developments in the United States have added to investor uncertainty. The November 3 midterm elections brought major gains for the Democratic Party, which took control of both chambers of Congress, raising questions about the political environment facing President Donald Trump's administration.
Investors are concerned that greater political scrutiny could affect the expansion of data centres and other artificial intelligence infrastructure projects. These facilities require large amounts of electricity and investment. Their construction has also attracted opposition from some local communities concerned about energy costs and pressure on existing infrastructure.
However, there has been no confirmation of a nationwide suspension or ban on artificial intelligence data centre projects in the United States. The immediate concern is that possible future political and regulatory changes could influence investment decisions.
The pressure has also extended to other important Asian technology markets. Taiwan Semiconductor Manufacturing Company, one of the world's leading semiconductor producers, experienced heavy selling. Its shares recovered from an earlier decline of 8.5 per cent to close 4.7 per cent lower.
South Korean semiconductor manufacturers Samsung Electronics and SK Hynix also faced selling pressure. In Japan, companies including SoftBank Group and Advantest were among those affected by the wider technology sector decline.
Financial concerns have also extended beyond ordinary share trading. Investors have become more cautious about companies with large financial commitments to artificial intelligence development. The cost of insuring against a possible default on SoftBank's debt reached a four year high, reflecting increased concern among investors about the company's financial risk. However, this does not mean that SoftBank has defaulted on its financial obligations.
Meanwhile, international oil prices increased on Friday amid continuing uncertainty surrounding the conflict involving Iran and global energy supplies. US crude rose 1.3 per cent to $91.67 a barrel, while Brent crude increased 1.7 per cent to $99.93 a barrel in prices reported during Friday's trading session.
The Middle East remains important to international energy markets because of the strategic position of the Strait of Hormuz, a major route for global oil shipments. Any disruption to shipping through the waterway can affect supply expectations and increase price volatility.
Higher oil prices could put additional pressure on countries that depend heavily on imported energy, increasing costs for transportation, manufacturing and electricity. Japan is particularly exposed to international energy price changes because it imports most of its energy requirements.
The latest market declines highlight how closely connected global financial markets have become. Developments in the United States can quickly affect technology companies, semiconductor manufacturers and investors across Asia.
For investors, the immediate challenge is assessing whether the enormous spending on artificial intelligence can produce sustainable profits while managing political, financial and energy related uncertainties. The sharp losses have also raised wider questions about the stability of technology valuations after a period of strong enthusiasm for AI development.