Fujikura Ltd (5803, Financial), a historic Japanese company founded in 1885, has become a standout performer in the Nikkei 225 index, with its stock soaring over 400% this year. This surge coincides with the global enthusiasm for artificial intelligence (AI), propelling Fujikura into the spotlight as a key player in the AI infrastructure boom.
Fujikura, known for producing cables for data centers, is set to join the MSCI Global Standard Indexes, becoming the only new Japanese entrant. The company has capitalized on the growing demand for AI-supportive infrastructure, which analysts estimate requires a trillion-dollar investment in data centers, power supplies, and communication networks.
Fujikura has expanded alongside Japan's industrialization, supplying cables and fiber optics to the automotive industry, utilities, and bullet trains. The company's CFO, Kazuhito Iijima, noted a significant rise in data center demand since 2022, driven primarily by AI advancements. Apple is among Fujikura's major clients for its fiber optic cables.
Fujikura recently raised its annual revenue forecast by 17% to 104 billion yen, with over 70% of its revenue generated overseas, including 38% from the U.S. The global data center capacity is expected to grow at an average annual rate of 33% by 2030, according to McKinsey.
Despite its current success, Fujikura is taking steps to mitigate potential tariff threats in its largest market, complying with the Build America, Buy America Act by establishing a U.S.-based production facility for ultra-high-density fiber optic cables.
Fujikura's stock is currently trading at a price-to-earnings ratio of 29, higher than its peers. While analysts remain optimistic about its prospects, some suggest competitors like Sumitomo Electric Industries and Furukawa Electric may have more upside potential.
Looking ahead, Fujikura sees nuclear fusion as its next significant opportunity, aiming for it to become a key sector for the cable industry by 2030.
