Murata raises full-year outlook as AI demand drives 41% profit growth

Murata Mfg Co (TYO:6981) has increased its full-year profit forecast by 41% following a surge in demand for data-center components. The company's first-half profit saw a significant rise, largely due to higher production volumes and a favorable product mix. Despite this positive outlook, Murata's shares experienced a 9.52% drop, mirroring a sell-off in Japanese technology stocks as investors raised concerns over the long-term viability and profitability of AI investments.

The Nikkei 225 index plummeted by as much as 3% amid the decline in tech stocks, with chip-related companies among the hardest hit. Murata's second-quarter revenue grew by 20.9% to 588.50 billion yen, while operating profit surged by 42.4% to 147.45 billion yen, marking a 26.7% increase in profit attributable.

For the six months ending September, Murata's revenue expanded by 20.8% to 1.09 trillion yen, with operating profit rising 48.9% to 245.91 billion yen. Profit attributable climbed 40.6% to 186.15 billion yen. To reflect this improved financial performance, Murata raised its full-year revenue forecast to 2.26 trillion yen from the previously estimated 2.11 trillion yen.

The company now anticipates operating profit of 520 billion yen, up from the earlier projection of 430 billion yen, and is projecting profit attributable of 396 billion yen, compared to the earlier estimate of 338 billion yen.

Murata's increased optimism is attributed to a growing demand for data center components, higher production volumes, and an improved product mix. The company also raised its capital expenditure forecast to 270 billion yen, up from 255 billion yen, as it invests in additional production capacity. Revenue from capacitors, including multilayer ceramic capacitors (MLCCs), increased by 33.1% in the first half to 605.58 billion yen, driven by demand across data centers, distributors, and mobility applications. Revenue from computer-related applications soared 61.2% to 235.11 billion yen.

Murata announced an interim dividend of 35 yen per share, up from 30 yen a year earlier, and maintained its full-year dividend forecast at 70 yen, compared to 65 yen for the previous fiscal year.