Breaking

Japanese Stocks Slide Into Correction as AI Rally Doubts Ripple From Wall Street

July 17, 2026 at 05:26 EDT

Infra & Chips
Finance

Japanese equities tumbled on Friday, sending the Nikkei 225 into technical correction territory, as a sharp selloff in U.S. technology and chip stocks reignited fears that the artificial-intelligence-fueled market rally may be running out of steam.

July 17 · Nikkei 225

Japan's AI Rally Slides Into Correction

A sharp selloff in U.S. tech and chip stocks reignited fears the AI-fueled boom is running out of steam — dragging the Nikkei more than 10% below its June peak in its steepest weekly drop since April 2025.

~4%

Friday drop, to ~64,141

>10%

Below the June 25 peak = correction

~40%

Kioxia's fall from its own peak

Chip & AI names bore the brunt

Single-session declines, Friday July 17

15%

7.7%

6.3%

5.9%

4.5%

Kioxia

Murata

SoftBank

Advantest

Tokyo Electron

The Bear Case

Valuations have outrun earnings. High-momentum AI stocks are underperforming sharply — a market correcting excess enthusiasm.

The Bull Case

AI infrastructure spending remains intact. Solid corporate earnings and cheaper valuations could cushion Japanese stocks — a repricing, not a rejection.

The open question: is this a temporary unwinding of crowded AI positions — or a deeper reassessment of the boom?

The answer likely hinges on how far the U.S. semiconductor selloff runs.

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