AI selloff: Japan's Nikkei enters bear market, SoftBank slides 11%

Japan's Nikkei 225 has entered a bear market, defined as a decline of 20% or more from its recent peak, with SoftBank Group shares falling 11% in the session as the broader selloff was attributed to the artificial intelligence trade. SoftBank's exposure to AI infrastructure and its large stakes in technology holdings make it a high-beta proxy for sentiment around AI valuations, so its sharp drop feeds directly into index-level weakness given the Nikkei's heavy weighting in technology and growth names. The transmission runs through risk appetite and equity-risk repricing: as investors reassess the earnings timeline and capital expenditure payoff for AI-linked companies, multiples compress and capital rotates out of the sector, weighing on the index and on yen-sensitive exporters as well. Traders should watch the performance of other AI-exposed Japanese names and the yen's direction, since a stronger yen would compound pressure on exporters while signaling broader risk-off flows. The next catalyst to monitor is the upcoming U.S. semiconductor earnings and guidance, which will set the tone for global AI-linked demand expectations.

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