The tech-heavy Nikkei slid as much as 2%, and was last down 1.8% at 49,955.08, slipping below the psychologically key 50,000 mark.
Startup investor SoftBank Group dropped 8.4% and chip-testing equipment maker Advantest, a Nvidia supplier, slumped 7%, making them the Nikkei’s top two decliners in index-point terms.
The broader Topix lost 0.8% to 3,286.16.
Overnight, investors returned to selling the darlings of the artificial intelligence-fuelled rally that carried Wall Street, Tokyo and other global bourses to successive record peaks in recent months. Nvidia slid 3.7% and AMD dropped 7.3%.
The Nikkei was headed for its worst week since the April tariff shock as the share gauge pulled back from a record peak touched on Tuesday. It was last down 4.7% for the holiday-shortened week. In October, the benchmark index rallied 16.6% to record its best month in 35 years. “Rather than a change in the way investors fundamentally view AI stocks, there is this risk-off mood around how fast these stocks have rallied,” said Nomura Securities strategist Fumika Shimizu.
Corporate results are also key for the market now, with Japan’s earnings season currently in full swing, she said.
The three biggest percentage decliners on the Nikkei on Friday all posted disappointing financial results. Environmental equipment supplier Kanadevia tumbled 20% and confectionary maker Ajinomoto and electronic component manufacturer Taiyo Yuden each shed more than 16%.
The biggest percentage gainer was also driven by corporate results, with HR technology firm Recruit Holdings jumping 15%.
Embattled automaker Nissan Motor got some respite after reporting a return to operating profit. Its shares climbed 5.3%.