Key Takeaways
- Japanese suppliers of smartphone components are projected to surpass consensus earnings estimates for fiscal third quarter 2027, fueled by surging AI device adoption.
- TDK received top pick designation with an overweight rating, supported by anticipated growth in rechargeable battery and HDD-related product lines.
- Murata Manufacturing earned an overweight rating due to increasing demand for its premium multilayer ceramic capacitors.
- Alps Alpine secured an overweight rating as production of its advanced camera actuators accelerates during the April–June period.
- Hirose Electric was upgraded to overweight based on projected earnings expansion in industrial machinery and AI server connector segments.
MorganStanley has turned its attention to Japanese manufacturers of smartphone components, projecting that multiple companies in this sector will exceed earnings expectations when they report fiscal third quarter 2027 results.
The global investment firm assigned overweight ratings to four companies in this industry — TDK (6762), Murata Manufacturing (6981), Alps Alpine (6770), and Hirose Electric (6806) — highlighting the expanding influence of AI-powered computing devices as the primary catalyst for heightened demand.
Among these selections, TDK emerged as the analyst’s unambiguous top choice.
What Makes TDK the Standout Pick
Morgan Stanley holds an optimistic view of TDK’s earnings outlook, emphasizing particularly strong performance expectations in its rechargeable battery division and hard disk drive-related offerings. These two segments are gaining heightened importance as AI infrastructure expands and consumer devices proliferate.
TDK’s battery technology powers an extensive array of products, and as AI-capable gadgets demand greater power consumption, the battery division enjoys a structural advantage. Meanwhile, the HDD business is benefiting from escalating data center requirements, which continue rising in parallel with AI workload expansion.
Shares closed at ¥1,942 prior to the analyst note’s release, marking an 8.22% gain for the trading session.
Additional Upgraded Names
Murata Manufacturing also received an overweight designation. Morgan Stanley highlighted rising demand and enhanced capacity utilization for the company’s multilayer ceramic capacitors — a premium component present in essentially every smartphone and increasingly integrated into AI hardware systems.
Alps Alpine represents the camera technology angle within this group. The company’s sophisticated camera actuators are scheduled to enter accelerated production during the April through June quarter, with results expected to materialize in upcoming financial reports.
Hirose Electric, recognized for its connector products, earned its upgrade based on anticipated earnings momentum in both general industrial machinery applications and AI server connectors. The server connector narrative has become a consistent theme throughout the sector — ongoing AI data center expansion continues driving elevated demand for precision interconnect solutions.
Morgan Stanley’s research note signals a wider perspective that AI technology is fundamentally redefining which components qualify as “high value” — and that Japanese manufacturers strategically positioned in these categories possess significant upside potential.
Hirose Electric shares advanced 3.75% during the session. Murata gained 12.73%, whereas Alps Alpine declined 1.74%.
