Tokyo stocks declined for a second straight session on October 20, with the Nikkei 225 opening lower and extending its losses throughout the day. The index finished down 1.30%, or 841.28 points, at 64,075.42.

The main drag on the market was again the AI and semiconductor sectors, which had posted sizable gains recently. Many core heavyweight stocks came under collective pressure as institutional money locked in profits near cyclical highs.

Core Drivers: Semiconductor and AI Sectors Give Back Gains

Amid growing global concerns about the sustainability of AI investment, overseas funds and Japanese institutional investors showed an increasingly clear inclination to take profits after the end of the fiscal first half. Highly valued technology blue chips broadly suffered heavy losses.

External Pressure and a Region-Wide Pullback in Asia-Pacific

Besides disruptions from a volatile U.S. stock market and elevated U.S. Treasury yields, major Asia-Pacific stock indices were broadly weak on the day. South Korea's KOSPI plunged 3.73%, further worsening risk appetite in East Asian markets and causing Japanese stocks to widen their declines late in the session.

Key Individual Stock Moves

Among the Nikkei's heavyweight stocks, the semiconductor and related technology supply chain sector saw the heaviest losses.

Advantest, a major AI chip testing company, faced strong selling from institutional funds and fell sharply, becoming one of the main weights dragging down the Nikkei.

Lasertec, a leader in semiconductor mask inspection equipment, was equally unable to escape, as its recent valuation premium faced a broad giveback amid the technology stock correction.

SoftBank Group was weighed down by fluctuations in the valuations of global AI assets and its technology venture portfolio, with the stock performing poorly and capital outflows evident.

Rohm and Fujitsu, in electronic components and the high-valuation technology sector, were also under overall pressure and generally moved lower with the broader market.