MAJOR Japanese companies are expected to post record net profits for the sixth straight year in the current fiscal year, as a solid technology sector backed by booming artificial intelligence demand will more than offset higher input costs from the Middle East conflict, analysts at Japanese securities houses say.
The race to build AI data centers is likely to continue to drive growth in the makers of semiconductors, chip-manufacturing equipment and other electronic parts in the year through March 2027.
SMBC Nikko Securities expects the net profits of 250 major companies listed on the Tokyo Stock Exchange to climb 19.3 per cent this fiscal year, led by companies related to the semiconductor industry. Nomura Securities projects that 242 major companies on the Tokyo bourse will see an average 5.9 per cent increase in net profit for fiscal 2026, while Daiwa Securities estimates 5.1 per cent growth in net profit for 210 firms listed on the bourse.
“AI and semiconductor-related companies are leading the climb (in profits) and are expected to continue growing as some negative factors, including high crude oil prices, are starting to settle,” said Hikaru Yasuda, chief equity strategist at SMBC Nikko Securities. Crude oil futures spiked right after the launch of US-Israeli strikes on Iran in February disrupted oil supplies. The Strait of Hormuz is a key artery for global energy shipments, with Japan heavily reliant on crude oil imports from the Middle East.
Kyodo
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