Electronic components Apr-Jun earnings are generally expected to be resilient, while short-term volatility risk is higher for stocks with large gains
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Electronic components Apr-Jun earnings are generally expected to be resilient, while short-term volatility risk is higher for stocks with large gains
JPMorgan expects that first-quarter FY2026 operating income for the Japanese electronic components coverage set is likely to meet or beat guidance, supported by a weaker yen and stronger demand in AI servers, industrial machinery, and automotive applications. But passive components and AI-server-related stocks have risen sharply, so short-term negative surprise could quickly pull prices down.
- Most covered companies assume FY2026 USD/JPY at 150-155, but the actual Apr-Jun reading was around 159-160, so FX is expected to support profitability.
- The report expects demand recovery in AI servers, industrial machinery, and automotive applications to be strong, so operating income for the Apr-Jun quarter is likely to meet or exceed company guidance.
- Passive-component and AI-server-related stocks have risen markedly since April, so if short-term earnings fall short of market expectations, shares may decline quickly.
- The report expects a possible MLCC shortage from FY2027, with price increases more likely to show up from Oct-Dec as customers prepare supply negotiations for 2027.
Report interpretation
Overview
This report focuses on the earnings outlook for Japanese electronic components coverage companies in FY2026 Q2 (Apr-Jun). The core view is that earnings momentum is broadly resilient, with operating profit supported by a weaker yen, AI servers, industrial machinery, and recovering automotive demand, but short-term stock reaction after earnings is harder to gauge because some related stocks have already rallied significantly.
Core views
The report believes that operating profits for the sector in the Apr-Jun quarter are likely to broadly meet or exceed company guidance. For passive components, short-term MLCC repricing is limited, while FY2027 may see a supply shortage and price upside is expected to be more of a medium-term theme. At the company level, Murata Manufacturing, TDK, Hirose Electric, MinebeaMitsumi, and Rohm have potential for upside surprises, while Taiyo Yuden faces downside risk because of uncertainty around when the Hyundai MLCC plant strike in Korea ends.
Analysis framework
The report mainly assesses earnings and stock-reaction risk through comparisons of quarterly operating profit forecasts with guidance, progress against company guidance, FX assumptions versus actual FX, recovery in downstream application demand, MLCC supply-demand and pricing cycles, and recent stock gains versus valuation reaction.
Methodology notes
Whether 1Q FY2026 operating profit meets or exceeds company guidance
The report compares JPMorgan's FY2026 Apr-Jun operating profit forecast with company guidance and market expectations to assess the likelihood of upside or downside earnings surprises.
Supportive impact of a weaker yen on Japanese electronic component profitability
Most covered companies assume FY2026 USD/JPY at 150-155, while the actual Apr-Jun range was around 159-160, so a weaker yen is likely to improve profitability measured in yen.
Limited pricing upside in the near term, with potential mid-term supply tightness supporting price increases
The report believes MLCC repricing opportunities from Jul-Sep are limited, but a shortage may emerge in FY2027, with customers recognizing tighter supply more clearly during Jul-Sep planning and Oct-Dec procurement negotiations for 2027.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Passive component stocksAffected by MLCC supply-demand, AI server demand, and near-term earnings expectations
- Strengths
- Mid-term support from expected MLCC shortage and improving AI server demand.
- Weaknesses
- Limited repricing scope from Jul-Sep in the near term, and stock prices have already risen quickly.
- Comparison
- Compared with general electronic-component companies, passive component stocks are more sensitive to MLCC supply-demand and pricing expectations.
- Risks
- If quarterly earnings do not meet market expectations, richly valued stocks could experience meaningful declines.
- Murata ManufacturingCore coverage company in MLCC and passive components
- Strengths
- A weaker yen and strong market backdrop could push 1Q operating profit to ¥90bn or above.
- Weaknesses
- Short-term upside in pricing is limited; results still need confirmation from actual results.
- Comparison
- Compared with Taiyo Yuden, the report's tone is more constructive on Murata's chance of a 1Q profit surprise.
- Risks
- If actual profits do not reflect FX and demand support, the stock may come under pressure.
- Taiyo YudenMLCC-linked company
- Strengths
- If FY2026 1Q results beat the cautious estimate, stock reaction could be strong.
- Weaknesses
- Its 4Q FY2025 results were below expectations, and the market remains very cautious on execution risk.
- Comparison
- Compared with Murata and TDK, near-term uncertainty is higher.
- Risks
- Uncertainty around the end date of the Korea MLCC facility strike could weigh on profit.
- TDKElectronic components coverage company
- Strengths
- The report forecasts 1Q operating profit of ¥67.4bn, and results clearly above ¥70bn would constitute a positive surprise.
- Weaknesses
- Needs actual earnings confirmation of the upside magnitude.
- Comparison
- Similar to Murata, it has a watch point for potential upside versus guidance.
- Risks
- If profits fail to beat high market expectations, short-term stock reaction may be muted or negative.
- Hirose ElectricConnector and electronic components coverage company
- Strengths
- Strong industrial machinery application demand and likely upside versus guidance progress in 1Q.
- Weaknesses
- Earnings leverage depends on sustained industrial machinery demand.
- Comparison
- Among potential upside companies, its main driver is more weighted toward industrial machinery demand.
- Risks
- If industrial demand recovery is weaker than expected, the upside-guidance thesis could weaken.
- MinebeaMitsumiElectronics and precision technologies coverage company
- Strengths
- Strong performance in the precision technologies business supports a possible 1Q beat of guidance.
- Weaknesses
- A multi-segment structure can make overall profit contribution from a single driver unstable.
- Comparison
- Unlike Hirose Electric, its positives are mainly driven by precision technologies performance.
- Risks
- If business segments diverge in strength, profit realization could fall short of expectations.
- RohmSemiconductor and discrete semiconductor coverage company
- Strengths
- Recovery in market conditions and tightening discrete semiconductor supply-demand may support a 1Q beat.
- Weaknesses
- Still exposed to the semiconductor cycle and pace of demand recovery.
- Comparison
- Compared with passive-component names, its key signal is more about discrete semiconductor supply-demand.
- Risks
- If semiconductor demand recovers more slowly or supply tightness eases, upside versus guidance may narrow.
Key data
- Actual USD/JPY in Apr-Jun159-160Above most covered companies' FY2026 assumption of 150-155, which is a positive FX headwind to profitability.
- Murata Manufacturing 1Q FY2026 operating profit forecast¥86.5bn; could reach ¥90bn or aboveThe report believes weaker yen and strong market conditions could lead to actual results above the cautious estimate.
- Taiyo Yuden 1Q operating profit forecast¥5.0bnThe end date of a strike at the Korean MLCC plant could cause profits to come in below forecast.
- TDK 1Q operating profit forecast¥67.4bnIf operating profit is clearly above ¥70bn, the report views that as a positive surprise.
- Companies with upside over guidanceHirose Electric, MinebeaMitsumi, RohmSupported respectively by strong industrial machinery demand, strong precision technologies business, and market recovery/discrete semiconductor demand-tight conditions.
Impact & implications
The investment implication is that near-term fundamental earnings are generally strong, but stock prices already reflect optimistic expectations. For stocks with larger gains and higher near-term execution or low-earnings risk, earnings releases may amplify short-term volatility. If passive-component stocks pull back due to short-term disappointment, the report suggests adding on weakness.
Risks
- Passive-component and AI-server-related stocks have risen quickly since April, and if near-term results miss guidance or merely fail to meet elevated market expectations, stock prices could decline sharply.
- Short-term volatility may rise for low-profitability stocks.
- Taiyo Yuden has downside profit risk from uncertainty over when the Korean MLCC production facility strike will end.
- MLCC repricing opportunities are limited from Jul-Sep, so overly optimistic short-term pricing expectations may not be met.
- If the FX tailwind weakens in subsequent quarters, profit support may diminish.
What to watch
- Whether Murata Manufacturing's FY2026 1Q operating profit reaches or exceeds ¥90bn.
- Whether TDK's 1Q operating profit is clearly above ¥70bn.
- When the Korean MLCC production facility strike at Taiyo Yuden ends, and whether FY2026 1Q profit falls below the ¥5.0bn forecast.
- Whether Hirose Electric, MinebeaMitsumi, and Rohm deliver above-guidance progress versus full-year guidance in 1Q.
- Whether customers begin to recognize FY2027 shortages and push pricing higher during 2027 supply negotiations in Oct-Dec.
- Valuation digestion and volatility in passive-component and AI-server-related stocks after earnings releases.