Nikkei falls over 2,500 points as AI, chip stocks slide

2026-07-17

Tokyo market opens lower again

The Nikkei average opened lower for a second straight session in the Tokyo stock market on the morning of the 17th. At one point, the decline exceeded 2,500 points, and the index even fell below the psychologically important 65,000 level. Selling spread to artificial intelligence (AI) and semiconductor-related stocks after the previous day’s drop in U.S. shares.

Weak U.S. stocks weigh on market

In the U.S. stock market on the 16th, the Dow Jones Industrial Average fell for the first time in three sessions, closing 0.2% lower than the previous day at 52,552 dollars. Although Taiwan Semiconductor Manufacturing Co. (TSMC), which handles semiconductor contract manufacturing, reported April-June 2026 results on the 16th that beat market expectations, TSMC’s American depositary receipts (ADRs) fell, prompting selling in semiconductor-related stocks. Yuho Tsuboi, chief strategist at Daiwa Securities, said: 'Because expectations had been high in advance, the stock was pushed lower by selling.'

Profit-taking leads the decline

Carrying over that trend, AI and semiconductor-related shares were also sold in the Tokyo market. Kioxia Holdings, Tokyo Electron and Advantest fell. Since the military conflict between the United States and Iran, AI and semiconductor-related stocks with high growth expectations have served as a destination for investment money, but Hiroshi Matsumoto, senior fellow at Pictet Japan, said: 'As concerns over the Middle East situation ease, investors are moving to profit-taking sales in AI and semiconductor-related stocks that have risen sharply.'

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