Japan's benchmark Nikkei share average fell more than 1% on Friday as a sharp decline in artificial intelligence and semiconductor-related stocks offset broader market strength, while SoftBank Group retreated despite reporting quarterly earnings that surpassed market expectations, Reuters reported.
The Nikkei dropped 1.17% to 64,911.99 in early trade, while the broader Topix index edged up 0.04% to 4,057.47. Despite Friday's weakness, the Nikkei was still on track for a weekly gain of 0.8%, while the Topix was up 1.3% for the week.
According to Reuters, SoftBank Group fell 4.3% even after the technology investment company reported a smaller-than-expected 18% decline in first-quarter profit on Thursday. Market participants appeared unconvinced that the earnings performance was sufficient to drive a sustained rally in the stock.
The weakness was more pronounced in chip-related counters. Advantest dropped 4.65%, Tokyo Electron declined 3.2%, and memory chip maker Kioxia slumped 7.5%, reflecting continued caution toward semiconductor stocks despite healthy corporate earnings.
Investor sentiment toward AI and chip companies remained fragile after their recent strong run-up, with concerns over valuations continuing to weigh on the sector even as earnings have largely remained resilient, Reuters said.
Broader market participation, however, painted a more positive picture. Around 60% of stocks listed on the Tokyo Stock Exchange's Prime Market traded higher, indicating gains across several other sectors.
Gaming giant Nintendo surged 4.7% after reporting a 150.5% jump in operating profit for the April-June quarter. The strong performance was driven by robust demand for Switch and Switch 2 software, along with refunds related to U.S. tariffs.
Sony Group also advanced 2.7%, providing additional support to the broader market.
Financial stocks traded higher as well, with Mitsubishi UFJ Financial Group rising 0.39% and Sumitomo Mitsui Financial Group gaining 0.47%.
The divergence between value and growth stocks remained evident. The Topix value share index climbed 0.26%, while the growth stock index slipped 0.35%, reflecting investors' continued preference for value-oriented sectors amid weakness in high-growth technology names.
