Layer 5 · 6762 — TDK Corporation
Thesis
TDK is the Japanese passive-components conglomerate with three legs of AI exposure: MLCC for AI server boards, lithium polymer batteries for data-center UPS and HDD suspension assemblies for the AI-driven nearline-storage build-out. FY26 was a record — NI +34% YoY. Tier B because the passive-components guide is only +0-3%, which holds back the top-line acceleration narrative even as profitability prints record numbers.
What it does + financial print
TDK is a Layer 5 passive-components house with a legacy HDD-component franchise that has unexpectedly turned into an AI thesis. The HDD suspension-assembly business — once viewed as a structural decline story as SSDs displaced spinning disks — has been bailed out by the AI storage hierarchy: hyperscalers run mountains of cold/warm data on nearline HDDs because SSD is too expensive at exabyte scale, and HDD suspension assemblies are core enabling components. TDK has ~85% global share.
FY26 print: net income +34% YoY, EPS JPY 98.78, record full-year profit. Stock hit a 3-year high May 1 with a +6.3% pre-market move. 1-month return +26.8%, 3-month +37.9%. Battery and HDD suspension were the standout segments. Passive-components guide of only +0-3% for FY27 is the disappointment — management is taking a conservative stance on the front half despite the MLCC tightness their peers (Yageo, Murata) are calling out.
Bull case
What promotes this to Tier A is an upward revision of the passive-components guide at the H1 review in October. If TDK joins Murata at the +30% OP guide level, the stock has fresh legs. The HDD suspension business is also under-appreciated — once the Street internalises that nearline HDD demand is structurally AI-linked, the multiple expands.
Gap / bear case
The +0-3% passives guide is conservative for a reason — TDK customers run higher inventory than Murata's, and management is wary of a Q3-Q4 destock. Stock has moved +27% in 1M; chasing here is mechanical risk.
Trigger to upgrade / downgrade
Upgrade trigger: H1 review (October) raises FY27 passive-components guide above +10%. Downgrade trigger: any inventory-correction commentary out of US/Korean OEMs.
The trade
- Entry zone: JPY 2,700-2,850 - Stop: JPY 2,550 (2×ATR; below 50-day MA) - Position size: 1% of NLV - Catalyst date: H1 FY27 review October; quarterly print early August - Conviction: 6/10