AI Stocks Tumble on Furukawa Earnings, Nikkei Falls After 3 Days

2026-05-14

On the Tokyo stock market on the 14th, the Nikkei Average fell for the first time in three trading days. The closing price was 62,654 yen, down 618 yen from the previous day. Furukawa's earnings, released at 2 p.m., came in below market expectations, and selling spread mainly across AI-related stocks.

Furukawa's Disappointing Earnings Weigh on Market

In the morning, the index had updated its intraday high, but it turned lower after noon. After the earnings announcement, the decline accelerated, and Furukawa shares were sold down to 6,355 yen, down 1,500 yen from the previous day, the lower limit of the trading range. The drag on the Nikkei exceeded 300 yen.

FY2027 Forecast Falls Short of Market

What triggered the selling was the consolidated earnings forecast for the year ending March 2027. Net profit is expected to fall 1% from the previous year to 156 billion yen, far below the market average forecast of 195.5 billion yen. Although the previous year included gains from selling shares in affiliates, operating profit is also forecast to rise just 12% to 211 billion yen, missing the average estimate of 263.6 billion yen. Demand for optical fiber cables for data centers remains solid, but concerns have emerged about delays in procuring some raw materials.

Clear Stock Selection Even Among AI Names

Furukawa's decline also spread to Kioxia Holdings, SoftBank Group, and Sumitomo Electric Industries. Kioxia Holdings had updated its all-time high in the morning, but later fell on sympathy selling and finished 4% lower. Meanwhile, SCREEN Holdings, whose results were in line with market expectations, was bought, at one point rising 17.29% to 13,155 yen and setting a new all-time high. It closed 9% higher. Its consolidated net profit forecast for the year ending March 2027, announced on the 13th, is 110 billion yen, up 20% from the previous year. Atsushi Yoshioka of Nomura Securities said, "Margin improvement from higher sales is stronger than expected."

Rate Rise Concerns Also Weigh

AI-related stocks had already risen ahead of the market since April, supported by growth expectations. According to JP Morgan Securities' tally, as of last Friday the FY2026 net profit forecast for the "electrical and precision" sector, which includes Tokyo Electron and Advantest, is expected to increase by 60% from the previous year. However, caution over global rate hikes is also lingering. The April U.S. Producer Price Index (PPI), released on the 13th, rose more than market expectations on a month-on-month basis, and U.S. long-term rates briefly climbed to 4.5%. In Japan's domestic bond market on the 14th, the yield on the newly issued 10-year government bond briefly reached 2.605%, its highest level in about 29 years.

Real estate stocks were also weak. Mitsui Fudosan and Mitsubishi Estate are expected to post strong results this fiscal year, but the Nikkei sector index for "real estate" fell 3% from the previous day, the fourth-largest decline among the 36 sectors. In businesses with high borrowing, higher interest rates tend to raise awareness of the burden from increased interest payments. Rie Nishihara, chief equity strategist at JP Morgan, pointed out that "rising rates are a near-term risk for the AI rally." Kazuyuki Muramatsu, head of the investment division at Wa Capital, also said, "AI is being bought in this earnings-driven market, but once the earnings season passes, the rally may calm down."

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