Why is Shin-Etsu Chemical stock rallying today?

Shin-Etsu Chemical's stock surged 3.0% to ¥6,025 on Wednesday, soaring after the company reported impressive half-year earnings fueled by robust demand for semiconductor materials driven by AI technology. On Tuesday, the company announced a 11% increase in net profit to ¥286.94 billion and a 15.6% rise in operating profit to ¥385.92 billion for the six months ending September 30.

Revenue for the period grew by 10.6% to ¥1.42 trillion, surpassing market expectations and providing a significant catalyst for the stock's rise. The electronics materials segment, in particular, stood out with operating profit climbing 28% to roughly ¥218.9 billion, highlighting Shin-Etsu's strong position as a supplier of high-value semiconductor silicon wafers and photoresists to chipmakers capitalizing on the AI trend.

For the full fiscal year ending March 2027, the company projected net sales of ¥2.7 trillion and operating profit of ¥700 billion, marking year-on-year growth of about 10%, reinforcing a bullish outlook. In the broader market, Japan's Nikkei 225 saw a 1% jump as AI and chipmaking stocks rallied, buoyed by strong earnings from memory chip leader SK Hynix.