Japan Stocks Slide for Second Day as Surging Bond Yields Hit AI-Related Shares

Forecast Trend Report by Period

Japanese stocks slumped for a second straight day on Aug. 19, led by semiconductor shares, as surging government bond yields fueled concerns that investment in artificial intelligence could slow.

The Nikkei 225 fell as much as 3.1% as of 9:18 a.m. in Tokyo. AI infrastructure-related stocks led the decline, including memory-chip maker Kioxia Holdings and fiber-optic cable manufacturer Furukawa Electric. The Topix also dropped as much as 2.8%.

Bloomberg identified the sharp rise in bond yields as the main driver of the selloff. Japan's 10-year government bond yield climbed the previous day to its highest level since 1996 as expectations grew that the Bank of Japan could raise interest rates again as soon as next month. The yield on the US 10-year Treasury also rose to near its highest level since early 2025.

Investors are increasingly worried that higher rates will lift funding costs for large technology companies that have driven the expansion of AI spending. That could in turn curb large-scale investment in AI infrastructure, including data centers and semiconductors. Semiconductor and AI-related shares, which had climbed on expectations for massive AI capital spending, are proving especially sensitive to higher yields.