Japan’s Nikkei plunges 5.7%, South Korea’s Kospi falls 7.4% amid AI stock rout

Japan's Nikkei 225 index fell by 5.7% early Friday, while South Korea's Kospi dropped 7.4%. The sell-off in AI-related stocks on Wall Street triggered the decline in Asian markets. The Nikkei 225 recovered slightly but closed at 57,576.63, down 5.7%. In South Korea, the Kospi ended at 4,985.99, down 7.4%, driven by Samsung Electronics shares falling 7.9%.

Hong Kong's Hang Seng index slipped 0.7% to 24,630.03, and Shanghai's Composite dropped 1.3% to 3,642.10. Global stock markets faced pressure from the ongoing decline of AI-related companies, raising concerns about potential slowdowns in AI data center construction due to expensive borrowing costs. Critics claim AI stock prices had exceeded their fair value, indicating a bubble.

Toyota and Nintendo reported weaker than expected earnings, causing their stock prices to decline. On Wall Street, the S&P 500 fell 4.4%, the Dow Jones Industrial Average dropped 1,833 points, and the Nasdaq composite plummeted 5.5%, marking the largest one-day decline since April 2025. Nvidia, the leading AI chip company, saw its stock plummet 9.3%, making it the biggest loser on the S&P 500, with a year-to-date loss of 2.6%.