Fujikura Ltd., a Japanese cable manufacturer with roots dating back to 1885, has emerged as the top performer on the Nikkei 225 Stock Average index, riding the wave of a global AI infrastructure boom.
The company's stock has surged over 400% this year, making it the best-performing Japanese addition to the MSCI global standard indexes on November 25.
Founded by Zenpachi Fujikura as a maker of silk and cotton-insulated wires, the company grew alongside Japan’s industrial expansion, supplying cables for the automotive sector, utilities, and bullet trains. Today, Fujikura specializes in high-performance fibre optic cables, essential components for modern data centres and AI infrastructure. Its ultra-thin cables can fit into narrow spaces without additional tunneling, giving it a competitive edge.
Fujikura’s Chief Financial Officer, Kazuhito Iijima, noted that the explosive demand for data centres since 2022 caught even the company off guard. This surge is attributed to AI’s growing need for robust infrastructure, including data centres, power supplies, and communication networks. Bloomberg News estimates that at least $1 trillion will be spent globally on building this infrastructure.
Over 70% of Fujikura’s revenue comes from international markets, with 38% originating in the US. The company recently revised its operating income forecast, increasing it by 17% to ¥104 billion ($674 million) for the fiscal year. Data centre capacity, a key driver of Fujikura’s growth, is expected to expand by 33% annually through 2030, according to McKinsey & Company.
While the stock trades at a price-to-earnings ratio of 29—significantly higher than competitors like Sumitomo Electric (11.8) and Furukawa Electric (20)—analysts remain optimistic. The company has 10 buy ratings, three holds, and no sell recommendations, though some experts believe its competitors may now offer more attractive returns.
Fujikura has taken steps to secure its position in the US market, complying with the Build America, Buy America Act by establishing a domestic production base for ultra-high-density optical fibre cables. This move aims to shield the company from potential trade disruptions, particularly as global tensions and policies evolve.
Despite its current success, Fujikura is already looking ahead. The company has identified nuclear fusion—a potential source of limitless clean energy—as a future growth area. Fujikura anticipates that the technology, backed by billionaires such as Sam Altman, Jeff Bezos, and Bill Gates, could drive demand for its cables from 2030 onwards.
"We see nuclear fusion as a key opportunity that could become a major pillar for the industry in the future," Iijima said.
Fujikura's current boom contrasts sharply with its struggles in 2020, when it posted its first loss in over a decade due to the pandemic and trade tensions.