AI boom turns 139-year-old cable maker into Japan's hottest stock

Tech firms pouring money into building data centers, other infrastructure for AI

The global boom in artificial intelligence (AI) has turned an obscure 139-year-old Japanese company into a stock market star.

Fujikura, which makes wire cabling for data centers, is the best performer on the Nikkei 225 Stock Average index, with its shares surging more than 400 percent in 2024.

It was set to join the MSCI global standard indexes on Nov 25 as the sole addition from Japan, while eight other companies from the country will be removed.

The firm is a classic "picks and shovels" investment as tech companies and utilities pour money into building out the necessary infrastructure to support AI.

Construction of the data centers, electricity supplies and communications networks needed for AI will require at least US$1 trillion (S$1.35 trillion) of spending, according to an analysis by Bloomberg News.

The rapid growth of the industry has surprised Fujikura itself.

"The demand for data centers has skyrocketed since around 2022," said Mr. Kazuhito Iijima, Fujikura's chief financial officer, in an interview. "We didn't quite understand it that well at that time, but it became clear this year that it was all about AI."

Fujikura, which counts Apple among its biggest customers, specializes in fiber-optic cables.