Positioning for the FA mid-cycle phase; previewing 2Q results

Research evidence excerpt

Positioning for the FA mid-cycle phase; previewing 2Q results

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Japan Capital Goods

Positioning for the FA mid-cycle phase;

previewing 2Q results

Price Objective Change

01 July 2026

The mid-cycle FA playbook; and 2Q CY26 preview Equity

AI- and data center-driven investment should extend the factory automation (FA) upcycle Japan

well into 2027. Yet as growth rates start to moderate into 2H 2026, we believe the FA Capital Goods

sector is potentially moving from early- to mid-cycle, a transition that could have

implications for share prices, which we examine in this report. We also preview the June- KenjinResearchHottaAnalyst>>

quarter earnings season, beginning with Yaskawa Electric’s results on 10 July. BofAS Japan

+81 3 6225 7786

FA upcycle to extend well into 2027 kenjin.hotta@bofa.comYuri Nishizaki >>

As the FA cycle potentially transitions from early- to mid-cycle, investor focus is likely to Research Analyst

BofAS Japan

shift from accelerating growth to the sustainability of current trends. While YoY growth yuri.nishizaki@bofa.com

is likely to remain healthy, we expect a gradual moderation into 2H26 and potentially a

more noticeable slowdown in 4Q on tougher comparisons, absent another step-up in

demand. The key question is whether this mid-cycle phase proves brief or prolonged. Exhibit 1: We revise our POs

Given the scale of AI-, semiconductor- (US Semiconductors: State of the Union: raising Stocks mentioned

estimates as AI extends visibility into 2028 23 June 2026), and data center-driven capex,

PO Price Inv.

our base case is that the upcycle remains intact and the mid-cycle phase extends well (¥/$) (¥/$) rating QRQ

into 2027. Yaskawa 6,500 7,302 Neutral C-2-7

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Positioning for the mid-cycle phase 7,300