Starting with the Democratic Party's landslide victory in the US midterm elections, concerns about AI regulation spread and the Nikkei 225 temporarily fell below ¥60,000. The index recovered the following week, but reports of NVIDIA's CEO resignation and regulatory developments at the state and federal levels also affected the market. We break down the factors to assess whether the AI and semiconductor market in Japanese stocks is "over" or presents an "accumulation opportunity."
On 6 November 2026, the Nikkei 225 ended trading at ¥57,434, down ¥3,643 from the previous day, falling below ¥60,000 for the first time in about six months. Against the backdrop of the US midterm election results, concerns about tighter regulation of AI data centers spread, and a sharp decline in the US semiconductor stock index SOX spilled over into the Japanese market.
The Nikkei 225 recovered the following week, returning to ¥61,142 on 13 November. This represented a recovery of about ¥3,700 in a short period, while reports of NVIDIA's CEO resignation also had a significant impact on market volatility.
US regulations are expected to center on the view that "a comprehensive federal suspension would be difficult, with cost burdens and conditional regulations at the state and local levels taking the lead." Political divisions over suspending data center construction are expected to continue. Japanese companies have a broad customer base extending beyond US data centers, and changes in supply and demand may affect earnings with a time lag.
This article identifies the substance of AI regulation as "an issue of sharing the burden of electricity and water costs" and presents checkpoints based on the diversity of Japanese companies' customer bases and supply chains. NVIDIA's earnings, developments in state-level regulations, the FOMC and US long-term interest rates, and the yen exchange rate are cited as factors that could influence the market going forward.