How Wall Street’s all-in bet on AI blew up

The Nikkei 225 stock average experienced a significant decline of over 7% on Friday morning, plummeting below the 60,000 mark for the first time since May. This downturn was closely aligned with substantial losses observed on Wall Street earlier in the day, as concerns regarding data center and artificial intelligence investments intensified in the wake of the Democratic Party's resounding victory in the U.S. midterm elections.

By 10:25 a.m., the Nikkei 225 had plummeted by 7.09%. Japanese companies with ties to AI, semiconductors, and data centers were particularly hard hit. Notably, Rohm plummeted by 20%, Furukawa Electric dropped over 19%, Resonac slipped by 15%, Kioxia fell more than 12%, and SoftBank Group witnessed an 11% decline. The Topix index also suffered, falling more than 6% during Friday's morning trading session.

Earlier in the week, the Nasdaq composite index had plummeted by 5.5%, marking the steepest decline since April 2025, while the S&P 500 index recorded a 4.4% decrease. The Philadelphia Semiconductor Index, which tracks the performance of the 30 largest U.S. semiconductor-related stocks, witnessed a sharp 12.3% plunge.