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Fujikura's Stock Plummets: AI Boom Wobbles
28 May
Summary
- Fujikura's market value dropped significantly due to earnings forecast disappointment.
- The company struggles to increase production to meet surging demand.
- Concerns rise about the stability of the global AI stock boom.
Japanese optical fiber cable maker Fujikura saw its shares plummet to approximately ¥5,329, erasing nearly $40 billion in market value. This sharp downturn followed investor disappointment over the company's earnings forecast and future business strategies.
Analysts attribute the decline partly to Fujikura's difficulty in increasing production capacity to meet escalating demand. Norikazu Shimizu of Iwai Cosmo Securities noted a gap between market expectations and the company's reality regarding production expansion.
Further concerns were raised by Amir Anvarzadeh of Asymmetric Advisors, who suggested that bottlenecks in power supply could delay data center builds, impacting cable manufacturers. William Nestuk of Pelham Smithers Associates pointed to potential future impacts from transceiver technology improvements, though this is seen as a few years out.
Despite these challenges, Fujikura benefits from clients like Apple, contributing about 4% of its income. Experts predict continued strong demand for data center cables, with global need projected to grow by 22.4% between 2024 and 2030, largely driven by North America.
