Nikkei retreats after 8-day run as AI buying holds firm

2026-06-23

Japan's Nikkei average fell on the Tokyo stock market on the 23rd. It closed down 2,565 yen, or 4%, from the previous day at 69,788 yen, as profit-taking spread after eight straight trading days of gains through the previous session. Buying interest in artificial intelligence (AI) and semiconductor-related shares remained strong, however, and the next focus is Micron Technology's earnings due on the 24th.

Profit-taking takes the upper hand

The Nikkei opened slightly higher before turning lower, at one point dropping as much as 900 yen from the previous day. About 60% of stocks on the Tokyo Stock Exchange's Prime Market fell. Although the Dow Jones Industrial Average edged up on the U.S. stock market on the 22nd, hyperscalers such as Alphabet and Microsoft were sold, and buying in AI and semiconductor-related shares also slowed in Japan.

Murata Manufacturing and Furukawa Electric fell, while physical AI-related stocks such as Fanuc and Yaskawa Electric were also sold. Kioxia Holdings, whose market capitalization briefly reached 6 trillion yen the previous day, fell as much as 5.05% on the 23rd. The Nikkei had risen for eight straight sessions through the 22nd, gaining more than 8,000 yen over that period. As of the 22nd, the benchmark was 9.30% above its 25-day moving average, exceeding the 5% level often seen as a gauge of overbought conditions.

Overheated, but expectations remain

Koji Toda, senior fund manager at Resona Asset Management, sees a phase in which short-term overheating has built up and profit-taking is easy to emerge. Kohei Onishi, senior investment strategy researcher at Mitsubishi UFJ Morgan Stanley Securities, also said buying in AI and semiconductors has started to lose momentum, though expectations remain at a plateau.

Even so, there is not a widespread view in the market that the AI rally has run its course. Ken Kamoshita, head of equity management at PGIM Japan, said earnings at AI-related companies are likely to accelerate further in the April-June quarter from estimated levels in the January-March period. Citigroup Securities raised its Nikkei average forecast to 90,000 on the 22nd, while Daiwa Securities revised its year-end 2026 forecast on the 18th to 80,000 yen from 67,000 yen.

Micron results a litmus test

Near-term attention is on Micron's quarterly results due on the 24th. Several analysts have already raised their target prices, and the company's shares have jumped sharply. Takahiko Masuzawa, head of equity trading at Phillip Securities, said the AI rally is likely to continue if Micron delivers strong results that meet market expectations.

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