TLDR
- Morgan Stanley expects Japanese smartphone component suppliers to beat consensus earnings forecasts for fiscal Q3 2027, driven by AI device demand.
- TDK was named the top pick and given an overweight rating, with expected earnings growth in rechargeable batteries and HDD-related products.
- Murata Manufacturing received an overweight rating on rising demand for high-value multilayer ceramic capacitors.
- Alps Alpine was rated overweight as its high-performance camera actuators ramp up production in April–June.
- Hirose Electric got an overweight rating based on expected earnings growth in industrial machinery and AI server connectors.
Morgan Stanley has put Japanese smartphone component makers in the spotlight, saying it expects several of them to beat earnings forecasts when fiscal third quarter 2027 results come in.
The investment bank issued overweight ratings across four names in the space — TDK (6762), Murata Manufacturing (6981), Alps Alpine (6770), and Hirose Electric (6806) — citing the growing role of AI computing devices as the key driver behind stronger demand.
TDK was named the clear top pick of the group.
Why TDK Stands Out
Morgan Stanley is bullish on TDK’s earnings trajectory, pointing specifically to its rechargeable battery segment and hard disk drive-related products. Both categories are seeing increased relevance as AI infrastructure and consumer devices multiply.
TDK’s batteries go into a wide range of products, and with AI-capable devices consuming more power, the battery business has a natural tailwind. The HDD side benefits from data center demand, which has been climbing alongside AI workload growth.
The stock closed at ¥1,942 before the note dropped, up 8.22% on the day.
The Other Overweight Names
Murata Manufacturing picked up an overweight rating too. Morgan Stanley flagged growing demand and improving utilization rates for its multilayer ceramic capacitors — a high-value-added component found in virtually every smartphone and increasingly in AI hardware.
Alps Alpine rounds out the camera play in the group. Its high-performance camera actuators are set to begin production ramp-up during the April to June quarter, which is expected to show up in the numbers.
Hirose Electric, known for its connectors, got the nod based on expected earnings growth in both general industrial machinery and AI server connectors. The server connector story is a recurring theme across the sector — AI data center buildout keeps pulling demand higher for precision interconnects.
The note from Morgan Stanley reflects a broader view that AI is reshaping what components are considered “high value” — and that the Japanese suppliers positioned in that space have more room to run.
Hirose Electric was up 3.75% on the session. Murata added 12.73%, while Alps Alpine dropped 1.74%.
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