Because their carrier operating doctrine and the associated technology were inadequite to cope with multiple US air strikes (which in part were chance rather than planned).
Essentially, the problem was this:
First, Japanese doctrine required that a fully coordinated strike from the entire Kido Butai (carrier strike group...ie all four carriers) be launched against the US carriers. Doctrine also called for aircraft to remain in their hangers (the Japanese at this point in the war do not deck park aircraft like the US does) until the strike is to be spotted and launched. This sequence takes about 50 to 60 minutes to complete (spot and launch). Their doctrine also called for securing strike aircraft in the hangers while CAP operations were in progress.
Thus, when the US strike(s) started to arrive CAP fighter operations were in progress. That is, Zero fighters were being launched and recovered as necessary to support a large CAP to defeat the US strike.
The reason the CAP was so important was that Japanese anti-air capacity from their ships was not highly effective and they knew it. Their best defense lay in using fighter aircraft to defend the carriers. Also, the Japanese had failed to develop a steaming formation specifically for air defense. Instead, they steamed in what was essentially a column of divisions formation similar to that used by battleships in WW I. Ships also maneuvered independently to avoid air attack....there was no fully coordinated air defense by the ships themselves...it was every man (ship?) for himself.
Coupled to this doctrinal situation was a lack of control systems for directing the CAP. Many Zero fighters lacked radios. The Japanese at this point had not provided radar on their carriers either. The effect here was that the CAP acted largely on their own. In the case at Midway the CAP was busy finishing off the torpedo attack strikes at low altitude when the dive bombers arrived at high altitude. The carriers failed to spot the dive bombers until they were nearly in position to strike due in part to lack of radar. With the CAP out of position the result was the destruction of 3 carriers.
By contrast, the US using carrier controlled interception and radar (think Battle of Britian contol system) was able to detect Japanese raids at usually up to 50 - 70 miles from the carrier group and vector fighters to a position to make an interception at 40+ miles. This gave the CAP more time and better position to ensure the strike was worked over thoroughly before it could attack. At Midway the Hyryu's first strike on Yorktown took nearly 80% casualities from CAP interception and, this became the normal case for Japanese strikes for the rest of the war.
So, as I stated, it was a failure of doctrine and technology that doomed the Japanese.
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