Key Highlights
- Japanese component manufacturers are poised to exceed consensus earnings estimates for fiscal Q3 2027, fueled by surging AI device adoption.
- TDK received top billing with an overweight rating, driven by anticipated growth in rechargeable batteries and hard disk drive products.
- Murata Manufacturing earned an overweight rating due to increasing demand for premium multilayer ceramic capacitors.
- Alps Alpine was upgraded to overweight as production of its advanced camera actuators accelerates during the April-June period.
- Hirose Electric secured an overweight rating based on projected earnings expansion in industrial equipment and AI server connectors.
Morgan Stanley has turned its attention to Japanese smartphone component manufacturers, forecasting that multiple companies will surpass earnings expectations when they report fiscal third quarter 2027 results.
The Wall Street firm assigned overweight ratings to four companies in the sector — TDK (6762), Murata Manufacturing (6981), Alps Alpine (6770), and Hirose Electric (6806) — highlighting the expanding influence of AI computing hardware as the primary catalyst for heightened demand.
Among the quartet, TDK emerged as the firm’s preferred selection.
TDK’s Competitive Edge
Morgan Stanley expressed confidence in TDK’s earnings outlook, emphasizing strength in its rechargeable battery division and hard disk drive-related offerings. Both segments are gaining traction as AI infrastructure expands and consumer electronics proliferate.
TDK’s battery products power an extensive array of devices, and with AI-capable gadgets requiring greater power capacity, the battery unit enjoys favorable market conditions. Meanwhile, the HDD segment is capitalizing on data center expansion, which continues to accelerate alongside rising AI computational requirements.
Shares closed at ¥1,942 ahead of the analyst commentary, climbing 8.22% during the trading session.
Additional Overweight Picks
Murata Manufacturing also received an overweight designation. Morgan Stanley highlighted strengthening demand and improved capacity utilization for its multilayer ceramic capacitors — a premium component integral to smartphones and increasingly prevalent in AI equipment.
Alps Alpine represents the camera technology angle within the group. Its sophisticated camera actuators are scheduled to enter production scaling during the April-June timeframe, which should materialize in upcoming financial results.
Hirose Electric, recognized for its connector technology, earned its upgrade based on anticipated earnings growth across general industrial equipment and AI server connectors. The server connector narrative continues to gain prominence throughout the industry — the buildout of AI data centers maintains upward pressure on demand for high-precision interconnect solutions.
Morgan Stanley’s analysis underscores a wider perspective that AI is redefining which components qualify as “high value” — and that Japanese manufacturers strategically positioned in this arena have significant growth potential ahead.
Hirose Electric advanced 3.75% during the session. Murata climbed 12.73%, while Alps Alpine declined 1.74%.
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