TDK (6762) Stock Surges 8% After Morgan Stanley Upgrade on AI Component Demand

TLDR

• Morgan Stanley projects Japanese component manufacturers will surpass consensus estimates for fiscal Q3 2027 earnings, fueled by artificial intelligence device proliferation.
• TDK received top pick designation with an overweight rating, based on anticipated growth in rechargeable battery and hard disk drive product segments.
• Murata Manufacturing earned an overweight rating due to increasing demand for premium multilayer ceramic capacitors.
• Alps Alpine secured an overweight rating as production scales up for its advanced camera actuators during the April-June period.
• Hirose Electric received an overweight rating on projected earnings expansion in industrial equipment and AI server connector categories.

Morgan Stanley has positioned Japanese smartphone component manufacturers at the forefront of investor attention, projecting multiple companies will exceed earnings expectations when fiscal third quarter 2027 financial results are released.

The Wall Street firm assigned overweight ratings to four companies within this sector — TDK (6762), Murata Manufacturing (6981), Alps Alpine (6770), and Hirose Electric (6806) — identifying the expanding influence of AI-powered computing devices as the primary catalyst driving elevated demand.

TDK Corporation, TTDKY

TDK emerged as the firm’s unequivocal preferred selection among the group.

TDK’s Competitive Positioning

Morgan Stanley maintains an optimistic outlook on TDK’s financial performance, highlighting particularly its rechargeable battery division and hard disk drive-associated products. Both segments are experiencing heightened importance as AI infrastructure and consumer electronics expand.

TDK’s battery technology powers an extensive array of products, and with AI-capable devices requiring greater power consumption, the battery division enjoys favorable market conditions. The HDD segment gains from data center requirements, which have been rising in parallel with AI computational demands.

The stock settled at ¥1,942 prior to the analyst report release, representing an 8.22% gain for the trading session.

Additional Overweight Recommendations

Murata Manufacturing also received an overweight designation. Morgan Stanley highlighted accelerating demand and enhanced capacity utilization for its multilayer ceramic capacitors — a premium component present in essentially every smartphone and progressively more common in AI equipment.

Alps Alpine completes the imaging technology investment thesis within the cohort. Its advanced camera actuators are scheduled to commence production scaling during the April through June timeframe, which analysts anticipate will materialize in financial results.

Hirose Electric, recognized for its connector products, earned the upgrade based on projected earnings acceleration in both general industrial equipment and AI server connectors. The server connector narrative represents a consistent theme throughout the industry — AI data center expansion continues driving demand upward for precision interconnection components.

The Morgan Stanley analysis represents a wider perspective that artificial intelligence is fundamentally altering which components command “premium” status — and that Japanese manufacturers strategically positioned within this ecosystem possess additional upside potential.

Hirose Electric advanced 3.75% during the trading session. Murata climbed 12.73%, while Alps Alpine declined 1.74%.

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