Japan's Nikkei weighed down by AI stocks ahead of Nvidia earnings

Most AI-related shares, which tend to be heavily weighted on the Nikkei, declined, with Fujikura 5803.T losing 5%, Advantest 6857.T dropping 3.9% and SoftBank Group 9984.T slipping 5.3%.

Chip-making tool manufacturers outperformed, though, with Tokyo Electron 8035.T rising 1.6%.

The broader Topix .TOPX inched up 0.2%.

U.S.-based Nvidia has notified some of its largest customers that AI server prices will rise by more than 15% amid soaring memory costs, Bloomberg reported on Saturday. The company announces financial results on Wednesday.

"We view the concerns over the profitability of semiconductor-related companies — led by Nvidia — as little more than a pretext or trigger for selling" following "a significant build-up of open positions in margin trading recently", said Wataru Akiyama, an equities strategist at Nomura Securities.

"I think it is fair to say that the outlook for earnings growth in AI and semiconductor-related stocks has not changed."

At the same time, with bond yields rising as a result of building inflation worries, "it does not appear that the Japanese stock market is currently in a position to sustain an upward trend", he added.

AI shares slumped in other Asian markets as well, with South Korea's Samsung Electronics 005930.KS tumbling around 9% to lead the KOSPI .KS11 3.1% lower. China's Alibaba 9988.HK plunged as much as 10.5% after launching a $10 billion share placement.