JPMorgan is bullish on semiconductor earnings upgrades, focusing on WFE capex, glass materials TAM, and cement overseas momentum
AI summary card
JPMorgan is bullish on semiconductor earnings upgrades, focusing on WFE capex, glass materials TAM, and cement overseas momentum
The report thinks the order of focus for Apr-Jun earnings is semiconductors above glass above cement; although semiconductor sentiment pulled back due to AI overheating concerns, upgraded earnings expectations and WFE growth continue to support the bullish call.
- Semiconductor-related stocks have recently adjusted due to concerns that the AI market is overheated, but the report maintains a bullish view, with the main rationale that consensus earnings expectations are still being revised upward.
- JPMorgan raised its WFE outlook to +28% YoY in 2026, +29% in 2027, and +16% in 2028, and said there remains further upside.
- Kioxia, Tokyo Electron, and Advantest are key semiconductor coverage names, with key variables including price trends, long-term contract direction, gross margin expansion, and TAM growth from GPU/ASIC as well as CPU/CPO.
- The glass section highlights Nittobo and Nippon Electric Glass, with key variables being capacity expansion, pricing strategy, and long-term demand from M9-use NER-glass and future MLC-use T-glass.
- The cement section notes domestic demand in Japan remains weak, with focus on Sumitomo Osaka Cement electrostatic chuck recovery and Taiheiyo Cement synergies after acquiring Vulcan Materials’ California ready-mixed concrete assets.
Report interpretation
Overview
This report is JPMorgan's Japan equities research team Apr-Jun earnings outlook for coverage companies in semiconductors and technology materials. The report sets the watch priority as semiconductors, glass, and cement. The semiconductor section emphasizes upward revisions to WFE spending, price revisions, and continued improvement in earnings expectations. The glass section focuses on semiconductor-related glass material capacity and long-term TAM expansion. The cement section, under weak domestic demand in Japan, focuses on non-domestic drivers such as exports, capacity adjustment, electrostatic chucks, and US business.
Core views
The core view is that semiconductors remain the most attractive theme; while stock prices have adjusted due to concerns about AI overheating, upgraded earnings expectations and the WFE growth outlook provide support. In glass materials, although Nittobo saw a notable pullback due to competition and pricing strategy concerns, the report still views its long-term positioning and M9/MLC-related demand positively. In cement, there may be limited major announcements in the short term, but for FY2026 the focus is on lifting capacity utilization and overseas/non-domestic demand drivers.
Analysis framework
The report uses a combination of sector comparison and company-event tracking: it first prioritizes semiconductors, glass, and cement to set the Apr-Jun earnings-season watch order, then assesses possible updates to price, capacity, margins, orders, and medium-term initiatives for each company when results are announced. On the semiconductor side, the focus is WFE, AI-related compute chips, NAND capex, and TAM from advanced packaging/interconnect. On materials, the focus is fiber-optic glass, semiconductor-support glass, M9, and MLC. On cement, the focus is overseas business, exports, capacity cuts, and electrostatic chucks.
Methodology notes
List the variables most likely to affect stock prices and earnings expectations during the Apr-Jun earnings disclosure period by sector and company.
The report ranks semiconductors, glass, and cement in order of watch priority and separately tracks variables such as WFE, price revisions, capacity expansion, non-domestic demand, and business synergies.
Use foundry equipment spending as an important leading indicator of demand for semiconductor equipment and related materials.
The report cites JPMorgan’s June 17 upwardly revised WFE forecast: +28% YoY in 2026, +29% in 2027, and +16% in 2028, and says there is still upside potential.
Express relative investment views via stock ratings such as Overweight, Neutral, Underweight, while noting that valuation methods and risks should be referred to in company research.
The body mentions several companies as Overweight, but target price, valuation model, and company-specific risks are not expanded in the provided text.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- KIOXIA Holdings (285A.T)Key semiconductor/NAND coverage company, rated Overweight
- Strengths
- Benefits from NAND price trends, long-term contract direction, and Super High IOPS progress.
- Weaknesses
- The report does not provide specific target price or short-term financial forecast details.
- Comparison
- Listed with Tokyo Electron and Advantest as a primary semiconductor focus name.
- Risks
- NAND prices, capex cycle timing, or long-term contract direction not meeting expectations.
- Tokyo Electron (8035.T)Key semiconductor equipment coverage company, rated Overweight
- Strengths
- May benefit from WFE growth, price revisions, and margin improvement; the report believes the 50% margin target may be achieved early.
- Weaknesses
- Relies heavily on execution of price revisions and additional initiatives.
- Comparison
- More directly exposed to an upside WFE cycle than materials and cement names.
- Risks
- WFE spending below expectations, slower-than-expected pricing execution, or delayed margin improvement.
- Advantest (6857.T)Key semiconductor test-equipment coverage company, rated Overweight
- Strengths
- TAM expansion from GPU, ASIC, CPU, and CPO could drive higher earnings.
- Weaknesses
- Valuation may be pressured by market concerns that AI demand is overheated.
- Comparison
- Compared with Tokyo Electron, it is also in the semiconductor equipment chain but with greater emphasis on AI computing and testing demand.
- Risks
- GPU/ASIC demand slows, or incremental TAM from CPU or CPO fails to meet expectations.
- Nittobo (3110.T)Key glass materials coverage company, rated Overweight
- Strengths
- The report is positive on its long-term positioning; M9-use NER-glass and future MLC-use T-glass may drive TAM expansion.
- Weaknesses
- The stock has adjusted significantly due to competition intensifying and pricing-strategy concerns; capacity expansion plans may not be explicitly disclosed in the short term.
- Comparison
- Together with Nippon Electric Glass, it is a primary focus in the glass segment.
- Risks
- Intensified competition, unclear direction for capacity expansion, or a pricing strategy not recognized by the market.
- Nippon Electric Glass (5214.T)Glass materials coverage company, rated Overweight
- Strengths
- Fiberglass business restructuring and recovery in semiconductor-support glass could improve the outlook.
- Weaknesses
- Recovery still requires additional company commentary and operating data confirmation.
- Comparison
- Compared with Nittobo, the focus is more on restructuring details and recovery of semiconductor-support glass.
- Risks
- Restructuring effects below expectations or slower-than-expected recovery in demand for semiconductor-support glass.
- Sumitomo Osaka Cement (5232.T)Cement company with meaningful exposure to semiconductor-related electrostatic chuck business
- Strengths
- NAND application is a key strength in the company’s electrostatic chuck segment, and the report expects CY2026 NAND capex growth of 30%.
- Weaknesses
- Domestic cement demand remains weak.
- Comparison
- Compared with pure domestic-demand-focused peers, this company is more influenced by recovery in semiconductor-related materials.
- Risks
- NAND capex below expectations, weaker-than-expected electrostatic chuck recovery, and continued domestic demand softness.
- Taiheiyo Cement (5233.T)Cement coverage company, with focus on US business and M&A synergies
- Strengths
- Synergy potential after acquiring Vulcan Materials’ ready-mixed concrete business assets in California is a key watch item.
- Weaknesses
- Domestic cement demand remains weak and major announcements in the Apr-Jun earnings period are expected to be limited.
- Comparison
- Compared with Sumitomo Osaka Cement, focus is more on US business and overseas synergies.
- Risks
- US business synergies not materializing as expected and domestic demand weakness persisting.
Key data
- Apr-Jun earnings watch orderSemiconductors > Glass > CementThe sector watch priority explicitly stated at the beginning of the report.
- WFE market forecast2026 +28% YoY, 2027 +29% YoY, 2028 +16% YoYForecast raised by JPMorgan on June 17, with still perceived upside potential.
- Kioxia watchpointsPrice trend, LTA direction, Super High IOPS progressKioxia Holdings is listed as Overweight.
- Tokyo Electron watchpointsPrice revision progress, additional measures, and potential early achievement of the goal to lift gross margin to 50% within two yearsThe report expects the market to watch for updates on the company’s pricing and margin-improvement actions.
- Advantest watchpointsGPU and ASIC trends, as well as comments on CPU and CPOThe report expects TAM growth from CPU and CPO to potentially drive further earnings upgrades.
- NAND capex outlookCY2026 YoY +30%Used to support the watch point on Sumitomo Osaka Cement’s electrostatic chuck recovery.
- Rating distributionOverweight 53%, Neutral 36%, Underweight 12% in JPMorgan global equity research coverageRating distribution disclosed as of July 4, 2026; percentages may not sum to 100% due to rounding.
Impact & implications
If WFE revisions, price revisions, and TAM expansion linked to AI/advanced computing continue to materialize, earnings expectations for the semiconductor equipment and materials chain may continue to be revised upward. Glass-material companies need to demonstrate long-term growth through capacity, product mix, and pricing strategy; cement companies, in the context of weak domestic demand, need to rely on exports, overseas M&A synergies, capacity adjustment, and improved semiconductor-related material business to support profitability.
Risks
- Ongoing AI market overheating concerns could continue to cap valuations of semiconductor-related stocks.
- WFE spending, NAND capex, or TAM growth from advanced computing may come in below expectations.
- Price revisions, margin improvement, or capacity expansion plans may fail to be executed as expected.
- Intensifying competition and pricing-strategy uncertainty in glass materials could affect market confidence in companies like Nittobo.
- Weak Japanese domestic cement demand may continue to weigh on cement company results.
- Mid-term measures such as overseas synergies, export expansion, or capacity cuts may materialize slower than expected.
What to watch
- Recent price trend, LTA direction, and progress on Super High IOPS at Kioxia.
- Updates from Tokyo Electron on price revisions, additional margin-improvement actions, and progress toward a 50% margin target.
- Advantest commentary on demand for GPU, ASIC, CPU, and CPO.
- Whether Nittobo discloses the direction of capacity expansion, and demand signals for M9-use NER-glass and MLC-use T-glass.
- Restructuring details in Nippon Electric Glass’ fiberglass business and signs of a recovery in semiconductor-support glass.
- The recovery pace of Sumitomo Osaka Cement’s electrostatic chuck business, especially NAND application demand.
- Post-acquisition synergy progress after Taiheiyo Cement acquired Vulcan Materials’ ready-mixed concrete assets in California.