AI Frenzy Turns Fujikura Into Japan’s Latest Stock Market Star

Fujikura’s stock soars 400%, driven by AI-fueled data center demand, global expansion, MSCI inclusion, and future nuclear fusion ambitions.

The global surge in AI has propelled Fujikura Ltd., a 139-year-old Japanese wire cabling company, to unprecedented stock market success. Fujikura’s shares have skyrocketed over 400% this year, making it the top performer on the Nikkei 225 Stock Average, says Bloomberg.

On November 25, it will join the MSCI global standard indexes as Japan’s sole addition, while eight other Japanese companies are being removed, as reported by Bloomberg.

Fujikura exemplifies a “picks and shovels” investment strategy, as its products support the infrastructure crucial for AI. Building data centers, power supplies, and communication networks for AI is estimated to require at least $1 trillion in global spending, according to Bloomberg.

The demand surge caught even Fujikura off guard. “The demand for data centers has skyrocketed since around 2022,” said Kazuhito Iijima, the company’s CFO. “We didn’t quite understand it that well at that time, but it became clear this year that it was all about AI,” as reported by Bloomberg.

Specializing in fiber optic cables, Fujikura supplies some of the industry’s smallest-diameter cables, allowing installation in tight spaces without extensive tunneling.

The company, which counts Apple Inc. among its major clients, has raised its operating income forecast by 17% to ¥104 billion ($674 million) for this fiscal year. Around 70% of its revenue comes from overseas markets, with 38% from the U.S, says Bloomberg.

Global data center capacity is projected to grow at an average annual rate of 33% through 2030, according to McKinsey & Company, according to Bloomberg.

“The area is still in the early stages of development,” noted Kazuhiro Sasaki, head of research at Phillip Securities Japan. “This field itself should continue to grow,” reports Bloomberg.

Fujikura’s history stretches back to 1885, evolving alongside Japan’s industrialization. Yet, its fortunes haven’t always been rosy. In 2020, it posted its first loss in over a decade due to the COVID-19 pandemic and U.S.-China trade tensions, notes Bloomberg.

With Donald Trump set to return as U.S. president, Fujikura has established a U.S.-based production facility compliant with the Build America, Buy America Act to mitigate tariff risks, reportes Bloomberg.

Looking ahead, the company sees nuclear fusion as the next big opportunity. “We hope that this will become a pillar of the industry from 2030 onwards,” said Iijima as reported by Bloomberg.