Nikkei Falls 2.6% to 62,960.60 as AI Spending Concerns Mount

Key Facts

Japan’s Nikkei 225 fell 2.6% to 62,960.60 in early Asian trading on Friday, October 30, as a selloff in technology stocks extended amid rising concern over the cost of the AI boom. Reuters said the index fell as much as 3% during the session, with chip-related stocks leading the decline. The agency linked the move to investor concerns about the sustainability of spending needed to fund the AI boom. The drop followed losses in U.S. technology shares, sending Nasdaq 100 futures lower. Concerns centered on whether large investments would generate sufficient returns and their effect on some companies’ cash flows.

At 2003 GMT, the Nikkei was down 2.8%, after falling 3% earlier, Reuters reported. Advantest shares fell 9.1% and Tokyo Electron shares dropped 5.6%; the major chip-equipment companies led the index’s losses. The two stocks’ performance reflects the selloff pressure on equipment makers whose businesses are tied to semiconductor-sector expansion. At that time, the index’s decline was smaller than its session low, but Japanese shares remained under pressure. In the United States, Alphabet shares fell 12.6% in Thursday’s session, October 29, while Intel shares dropped 23% and Amazon shares fell 7% in extended trading. The declines in the three stocks sent Nasdaq 100 futures down 1.4%, according to Reuters.

Alphabet’s decline was exceptional by historical comparison, according to the Associated Press: its Class A shares fell 12.6% in Thursday’s session, their worst session since they began trading more than 20 years ago. This puts the move in a broader context than a single stock’s decline in extended trading, as the loss occurred in the same U.S. session that preceded the drop in futures. Pressure widened after company results and forecasts again put the scale of capital spending on AI infrastructure development in focus. In Japan, the concern was reflected in chip and equipment stocks, while in the United States it took the form of sharp declines in technology shares. The concern cited in market reports centered on whether returns and cash flows would be sufficient to meet this spending, rather than on a broad judgment about sector valuations.

Amazon’s third-quarter results offer a picture combining accelerating cloud-computing activity with high investment costs. Amazon Web Services sales rose 39.3% to $46 billion, compared with growth of 37% in the previous quarter, according to the Associated Press. The company said this was the service’s fastest growth in about five years. At the same time, Amazon kept its forecast for cash capital spending in 2026 at about $220 billion. Chief Executive Andy Jassy announced in July that the company was raising its technology spending plan 10%, from $200 billion to $220 billion, following the plan announced in February. Spending includes AI data centers, robotics, semiconductors and satellites, keeping the question of returns on investment in focus alongside sales growth.

EL7 Nasdaq 100 closing data show the index fell from 29,813.16 on October 28 to 29,402.51 on October 29. The lower close came the day before the 1.4% drop in futures that followed declines in Alphabet, Intel and Amazon shares. Market reports link the selloff to fears that heavy spending on AI is not generating sufficient returns and could weigh on some companies’ cash flows. Amazon Web Services’ sales growth, which accelerated in the third quarter, puts those concerns alongside signs of demand for cloud computing. But the $220 billion spending plan keeps the expected scale of investment central to investors’ assessment of company results. The sources do not establish that the selloff reflected a broad judgment that technology stocks are overvalued.

In Japan, the Bank of Japan was concluding a two-day monetary policy meeting on Friday. Most analysts expected the bank to leave interest rates unchanged at the meeting, according to the Associated Press. The meeting’s conclusion comes as Japanese shares face pressure from chip-company declines and mounting concerns about financing the AI boom. The bank meeting gives markets a near-term milestone after the Nikkei’s losses, alongside continued monitoring of the response in U.S. technology shares. Amazon, for its part, expects fourth-quarter 2026 sales to range from $240 billion to $247 billion, with annual growth of 12% to 16% compared with the same period a year earlier. The forecast provides the next measure of the company’s performance, while its expected spending of $220 billion for 2026 remains central to the debate over returns and cash flows.