Japan stocks plunge 3,000 points intraday; AI and semiconductor shares take a direct hit [U.S. midterm elections]

【Financial News, Tokyo=Correspondent Seo Hye-jin】Japanese stocks plunged, led by AI and semiconductor shares, after Democrats appeared to have the upper hand in the U.S. midterm elections. Concerns over tighter regulations on data center construction dampened investor sentiment.
On the 4th, the Nikkei 225 Stock Average (Nikkei index) closed at 62,188.63, down 893.23 points (1.42%) from the previous trading day. Intraday losses exceeded 3,000 points, bringing the index to just short of breaking below the 60,000 level, but it pared its losses in the afternoon.

Selling focused on AI-related stocks as reports indicated that Democrats were leading in both the House and the Senate in the U.S. midterm elections. The concern was that Democrats could tighten construction regulations to curb electricity bill increases driven by data center expansion. Fears grew that a slowdown in data center investment could also dampen demand for AI semiconductors and memory.
The gubernatorial election results in Texas and Ohio, where data centers are concentrated, were also seen as factors that could shape future construction policy.

Shares in Japanese memory semiconductor maker Kioxia fell below 10,000 yen intraday as its earnings outlook fell short of market expectations. Adjusted for the stock split, this was the first time since April 13. Shares had also fallen more than 15% on the 2nd, but some investors snapped up shares at lower prices, expecting the semiconductor boom to continue.
Tomoichiro Kubota, chief market analyst at Matsui Securities, said, “Buying continued among investors who do not believe the semiconductor cycle is entering a downturn.”
A worsening earnings outlook from U.S. company Apple also weighed on the market. Apple forecast slower revenue growth and weaker profitability for October to December this year. After Apple shares fell nearly 2% on the 3rd amid cost pressures from rising memory prices and concerns about declining sales, Japanese electronic components stocks, including Murata Manufacturing, TDK and Taiyo Yuden, also weakened.
However, some market analysts said the correction was excessive, driven by short-term selling. Takuma Ikemoto, a market analyst at Tokai Tokyo Intelligence Lab, said, “Even from a national security perspective, the U.S. cannot stop AI development.”
Some AI companies, including Japanese semiconductor testing equipment maker Advantest Corporation, reported earnings that exceeded market expectations. If growth in the AI industry continues, the downturn could present an opportunity to buy at low prices, but volatility stemming from regulatory uncertainty is expected to persist for the time being.
[email protected] Seo Hye-jin Reporter