TDK Shares Jump 11% as AI Data Center Demand Fuels Profit Upgrade

The Tokyo-based manufacturer reported that net profit climbed 13% while net sales rose 11% during the three quarters ending in December. In response to the strong performance, TDK upgraded its fiscal-year guidance, now projecting a 14% increase in net profit and a 12% rise in revenue. Shareholders are also set to benefit from a revised dividend projection, which the company increased to 34 yen from an earlier estimate of 32 yen.

Management attributed the revised forecast to a confluence of favorable market conditions. New smartphone launches bolstered sales for TDK’s battery and sensor divisions, while the ongoing global expansion of data centers drove robust demand for hard disk drives (HDDs). A weaker yen further supported the bottom line for the export-heavy firm. According to Morningstar equity research director Kazunori Ito, management expects HDD shipment growth to reach approximately 30% in the coming fiscal year, specifically targeting the magnetic head segment.

Riding the AI and Tech Recovery

The rally reflects a broader trend among Japanese specialized component makers, which have become integral players in the global AI supply chain. Analysts suggest the market had previously been too pessimistic regarding external pressures. Andrew Jackson, head of Japan equity strategy at Ortus Advisors, noted that investors had over-indexed on concerns regarding higher memory prices and China’s rare earths export ban. Instead, investor focus has shifted back to TDK’s core strengths in high-growth tech sectors.