Japan Stocks Sink as Rout in Technology Shares Spreads to Asia

A downturn in the largest technology companies in the United States spread to Asia on Tuesday, causing stock markets in Japan to decline as U.S. markets showed signs of stabilizing.

Japan’s tech-heavy Nikkei 225 dropped 1.4 percent, with Softbank, the Japanese investment firm heavily invested in the technology sector, falling approximately 5 percent. Arm Holdings, the U.S.-listed chip design company majority-owned by Softbank, plummeted over 10 percent on Monday.

Many financial markets in Asia, including those in China and Taiwan, were shuttered on Tuesday for Lunar New Year celebrations. Mainland China’s markets will remain closed for the entire week.

Shares of U.S.-listed technology companies, particularly those boosted by investor optimism about the profit potential of artificial intelligence, took a hit on Monday following claims by Chinese A.I. firm DeepSeek that it could achieve advanced chatbot capabilities using fewer costly computer chips.

Futures on the S&P 500, enabling investors to speculate on the index beyond regular trading hours, dipped during Asian trading on Tuesday after a 1.5 percent decline on Monday. Shares of Silicon Valley chip company Nvidia, which saw around $600 billion wiped off its market value on Monday, showed signs of stabilization.

Nvidia is a key player among a group of major technology firms referred to as the Magnificent Seven. These tech giants have been driving the overall market upwards in recent years with impressive returns, but concerns have arisen regarding the market’s overreliance on their performance.

“While vulnerabilities were anticipated this year, events like DeepSeek’s announcement underscore the importance of diversification beyond the Mag 7,” stated Seema Shah, chief global strategist at Principal Asset Management. She emphasized that the assumption of continued uninterrupted growth in U.S. stocks “is now uncertain,” pointing to challenges such as persistent inflation and the potential impact of significant tariffs on consumer spending and economic expansion.