Fujikura’s Reality Check: Record Profits Can’t Mask a Hydrogen Shortage and a 24% Share Price Wipeout

Fujikura's revenue surged 20.7% and net profit soared 72.5%, but weak FY2027 guidance and a hydrogen supply bottleneck triggered a 24% stock selloff, with recovery uncertain.

The numbers for Fujikura’s past fiscal year were nothing short of stellar. Revenue surged 20.7% to around ¥1.18 trillion, operating profit jumped 39.2%, and net income exploded 72.5% to roughly ¥157 billion. Yet the market response was brutal. Since the results landed on 14 May, the stock has shed about 24% of its value, closing at ¥4,850 on Friday, 22 May — a net weekly decline of roughly 14% from the prior Friday’s ¥5,653.

Investors are not punishing the past; they are pricing in the future. Management’s guidance for the year ending March 2027 projects net profit of ¥156 billion, a marginal 0.7% drop year-on-year. That fell far short of the consensus estimate of ¥195 billion, triggering a wave of selling that saw the stock plunge 16.95% on 19 May alone and a further 8.52% the next day. Two subsequent recovery days — including a 7.75% bounce on Friday — only partially repaired the damage. Friday’s session was itself a rollercoaster, opening at ¥4,650, spiking to ¥5,031, dipping to ¥4,558, before settling at ¥4,850.

Underpinning the selloff is a tangible operational bottleneck. Fujikura is struggling with a shortage of hydrogen, a gas essential for producing the high-density fibre-optic cables that data centres voraciously consume. The constraint throttles capacity precisely when AI infrastructure demand is red hot. The company’s medium-term plan calls for ¥1.6 trillion in sales by 2028, but investors are sceptical of the timing, especially with production hobbled.

To address the capacity gap, Fujikura is channelling ¥260 billion of its planned capital expenditure into the United States, aiming to quadruple its fibre-optic cable output versus the 2022 baseline. Yet management quickly tempered enthusiasm: new capacity will only come online gradually from 2030 onwards. A separate ¥40 billion expansion at the Sakura Works site in Japan and the establishment of a US subsidiary reinforce the long-term bet on AI-driven demand, but offer little near-term relief.

The stock’s technical picture is mixed. After hitting a record near ¥8,000 in mid-May, the shares crashed to a low of ¥4,295 on Wednesday before bargain hunters intervened. The 50-day moving average stands at ¥5,460, well above the current price, while the 20-day average at ¥4,574 provides a thin floor. The Relative Strength Index sits at about 47, a neutral reading. Support lies at ¥4,832, with resistance at ¥4,943, then ¥5,008 and ¥5,054.

Analysts, however, remain broadly constructive. Nine of eleven rate the stock a Buy, two say Hold, and the consensus price target is ¥5,700. Nomura/Instinet reaffirmed a Buy rating on Friday with a ¥5,500 target. The underlying demand for AI infrastructure is intact; the question is how long investors must wait for Fujikura’s operational problems to be resolved.

A separate milestone looms later this year. On 26 June, shareholders will vote on a new director compensation package capped at ¥500 million annually, designed to tie executive incentives more closely to long-term share performance. The move follows a 6:1 stock split effective 1 April 2026, which reset the per-share dividend for the current year to ¥38, equivalent on a split-adjusted basis to the ¥225 paid last year.

For now, Fujikura’s AI narrative remains compelling, but the market is demanding proof that the hydrogen shortage can be fixed and that the profit trajectory will turn decisively upward before 2030. The coming weeks will test whether Friday’s bounce is a temporary reprieve or the start of a sustained recovery.