Marketing Feedback/Investment Themes: Expectations on Recruit Re-rating in Internet & Media; In IT Services, Focus on Near-term Earnings Momentum at 3 Majors

研报英文原文证据摘录

Marketing Feedback/Investment Themes: Expectations on Recruit Re-rating in Internet & Media; In IT Services, Focus on Near-term Earnings Momentum at 3 Majors

IdeaM

IT & Software: Focus on Short-term Earnings Momentum at

the Three Majors

Mid-term 2-digit profit growth for Japanese IT services & software is already market

consensus: For Japanese IT services & software firms, the market already broadly shares

the view that earnings visibility is solid and at least a 2-digit profit growth can be secured

medium term.

Top-line growth at AI-linked software firms driving share price globally vs. J-company

sales growth lag: Globally, shares of firms providing software/solutions directly used in AI

adoption by firms & institutions, incl. demand related to rebuilding data infrastructure,

products that promote AI-driven data utilization, and cybersecurity solutions for the AI

era, have performed well on markedly high sales growth regardless of valuations.

Compared with these outperformers, Japanese names have more limited sales growth.

Although their profit growth potential is understood, AI adoption is still at an early stage,

and market attention is focused on sales growth.

As AI enters the social implementation phase, profit growth scenario for Japanese IT

should be re-rated: Japanese IT services & software names are understood to be the

service providers that will execute AI adoption for enterprises & institutions. However,

because their sales growth is limited, a high-profit-growth scenario driven by margin

improvement has struggled to attract attention in the current equity market. As the

theme shifts from building AI tech and infrastructure to using AI to drive business and

profit growth, the profit growth scenario for Japanese IT services & software firms should