Japan's Nikkei Falls Nearly 3% as AI Spending Fears Hammer Chip Stocks

Japan's Nikkei share average dropped as much as 3% on Friday, settling around 2.8% lower as of late Tokyo trading, led by a sharp selloff in chip-related stocks amid growing concern over the sustainability of spending to fund the artificial intelligence boom.

The slide followed a bruising session for global technology names. Alphabet fell 10% in extended trading after its sales underwhelmed investors, reinforcing fears that Google is losing ground to AI rivals despite heavy capital outlays. Samsung Electronics dropped more than 5% after profits missed estimates, dragging South Korea's Kospi down 2.9%. Intel plunged 23% after hours on Thursday after warning it would burn cash this year, citing a faltering PC market and supply bottlenecks at its manufacturing operations.

The back-to-back disappointments from major tech companies revived longstanding doubts about whether the billions of dollars being poured into AI infrastructure can deliver returns quickly enough to justify elevated valuations, sending a chill through chip and AI-linked shares across Asian markets.