Nikkei and Kospi slide as fading AI enthusiasm triggers Asian market sell-off

Japan’s Nikkei share average fell for a second straight session on Friday as enthusiasm around artificial intelligence stocks faded, after the benchmark had closed at a record high earlier in the week, according to Asharq Al-Awsat.

The pullback came as broader Asian markets also weakened, with South Korean shares leading the sell-off. Asharq Al-Awsat reported that the Kospi dropped more than 5 percent as investors moved away from riskier technology and AI-linked names.

The declines underscore how quickly sentiment can shift in markets that have been driven higher by optimism about artificial intelligence. After a run-up that helped push Japan’s Nikkei to fresh highs, Friday’s trading suggested investors were taking profits and reassessing valuations.

In South Korea, the sharp fall in the benchmark index pointed to more widespread pressure across the region’s equity markets, not just in Japan. The report described the losses as part of a broad sell-off, indicating that weaker confidence was affecting multiple major exchanges.

The move matters because Asian markets have been a key beneficiary of global interest in semiconductor, hardware and other AI-related stocks. A sustained reversal could weigh on some of the region’s biggest companies and reduce momentum in markets that had recently been boosted by the AI trade.

What happens next will depend largely on whether investors view the recent pullback as a short-lived correction or the start of a deeper reassessment of AI-related valuations. For now, Friday’s trading showed that the rally’s biggest driver has become less dependable, at least in the short term.