Foreigners Sell Japanese Stocks as AI Bubble Fears Intensify

Overseas investors turned net sellers of Japanese equities last week, the first such outflow in two months, as worries about an artificial-intelligence-driven market bubble prompted profit-taking.

Foreign investors had been consistent buyers of Japanese stocks since early April, a wave of inflows that helped propel the Nikkei 225 Stock Average to repeated all-time highs. The buying was fueled by optimism around AI-related companies, particularly semiconductor and tech hardware names, which have seen outsized gains. However, the recent shift suggests that some market participants now view valuations as stretched, especially after the rapid run-up in AI-exposed stocks. The selling also comes amid a broader reassessment of global tech exposure, as investors weigh the sustainability of AI-driven earnings growth against elevated valuations.

For equity traders, the reversal in foreign flows is a key signal to watch. Foreign participation has been a major driver of the Japanese market's rally, and sustained selling could pressure the Nikkei and Topix indices. The move also reflects a potential rotation out of high-growth tech into value or defensive sectors. Live stock prices and charts on NowPrice show how the market is reacting to this shift in sentiment. Traders should monitor upcoming economic data from Japan, including GDP revisions and industrial production figures, as well as global cues such as US Federal Reserve policy signals and AI-related earnings reports, which could either reinforce or reverse the selling trend.