Japan's Nikkei slumps 2% as tech shares tumble, overwhelming broader market gains

Heavily weighted AI-related plays dropped after the overnight slide in U.S.-listed chipmaker AMD AMD.O and SpaceX SPCX.O as concerns about massive AI spending flared again. .N

AI-focused startup investor SoftBank Group 9984.T slid 6.6%, chip-making equipment maker Tokyo Electron 8035.T skidded 6.3% and chip-testing tool manufacturer Advantest 6857.T slipped 4.2%.

By comparison, the broader Topix .TOPX shed a relatively small 0.4%.

"Because these semiconductor-related stocks have a high impact on the index, the selloff looks harsh at first glance but overall market sentiment hasn't deteriorated drastically," said Wataru Akiyama, an equities strategist at Nomura Securities, adding that the broader market was buoyed by the decline in oil.

The Topix foods index .IFOOD.T rose 2.3% to be the best performer among the Tokyo Stock Exchange's 33 industry groupings, with sauce maker Kikkoman 2801.T surging more than 12% after favourable earnings.

Other standouts included healthcare equipment maker OMRON 6645.T, with a 15% rally, and Tokai Carbon 5301.T, which advanced more than 14%.

SoftBank Group reports results after the market close, along with Nintendo 7974.T, which was last up 1.3%.

Japan's Nikkei share average sank 2% on Thursday, as heavyweight tech stocks tracked losses in Wall Street peers, outweighing gains in most stocks amid lower crude oil prices on hopes of a Middle East peace deal.

The tech-heavy Nikkei .N225 fell just over 2% at one point, and was 1.8% lower for the day at 85,108.28 at 0133 GMT.