Kanda Hayato Forschungsgemeinschaft (KHF) — Kanda-kai Securities Division | 16th March, Reiwa 8 Published: 17th March, Reiwa 8 Advantest (6857) ¥19,960 ▼ approx. 3% — profit-taking continues Tokyo Electron (8035) ¥21,000s — selling pressure dominant; position adjustment NVIDIA (NVDA) Correction continuing; SOX Index also soft Global AI Market (2030 forecast) $211bn ▲ approx. 20× vs. 2023 (JEITA projection) Domestic AI Market (2030 forecast) ¥1.7774tn ▲ approx. 15× vs. 2023 (JEITA projection) Advantest — Current-Term Results Operating profit +63.9%; Revenue ¥950bn (post upward revision) In today’s Tokyo market, AI and semiconductor-related equities were broadly sold off. Major names including Advantest (6857) and Tokyo Electron (8035) continued to face sustained profit-taking and position adjustment, weighing upon the Nikkei Average. Compounding matters, elevated oil prices and geopolitical risk have combined with lingering concerns over excessive AI investment — a sentiment that has smouldered since the “DeepSeek Shock” of January, Reiwa 7 — to produce a threefold headwind. Nevertheless, the Kanda-kai Securities Division of the Kanda Hayato Forschungsgemeinschaft (KHF)(KHF) has stated that “short-term share price correction and long-term growth trajectory are entirely separate matters,” maintaining its view that the structural growth of AI-related equities remains unimpaired. The present report sets out in full the basis for that assessment and the scenarios that lie ahead. The Three Causes of the Current Correction The factors driving the present correction may be organised into three distinct layers. Factor Substance Nature ① Geopolitical risk & elevated oil prices WTI crude exceeding $102 per barrel on fears of Strait of Hormuz closure. Investors are wary of the impact upon data centre operating costs and semiconductor manufacturing costs as energy expenses rise. A risk-averse mood pervades the market as a whole, rendering growth equities — perceived as richly valued — particularly susceptible to selling. Temporary ② Transition to a “selection phase” Following the sharp rally across AI equities in Reiwa 6–7 (2024–2025), driven largely by anticipatory buying, Reiwa 8 (2026) has ushered in a “selection phase” in which valuations are determined by whether companies are genuinely generating earnings. Positions built on expectation alone are being unwound — a correction that may, in itself, be regarded as healthy. Structural shift ③ The lingering shadow of the DeepSeek Shock In January, Reiwa 7, China’s DeepSeek unveiled a large language model reportedly matching GPT-class performance at a fraction of the cost. The question of whether vast GPU investment is truly necessary was impressed upon the market, triggering a sharp decline in AI semiconductor equities led by NVIDIA — a memory that continues to weigh. Since then, strong earnings have repeatedly been met with selling as pre-emptive positions are unwound. Psychological Having analysed these three factors, the Kanda-kai Securities Division concluded as follows: factor ① is a shock capable of resolution; factor ② is evidence of maturation; factor ③ is an overreaction grounded in misapprehension. None, it maintains, alters the structural foundations of long-term AI demand. The Numbers Speak — The Reality of Growth Whilst share prices undergo correction, the underlying business performance tells an altogether different story. Reviewing the current-term results of the principal AI-related equities for the fiscal year ending March, Reiwa 8, one finds substantial revenue and profit growth either achieved or anticipated across the board. Stock Code Current-Term Revenue (forecast) Current-Term Operating Profit (forecast) Principal Drivers Advantest 6857 ¥950bn (+21.8% YoY) ¥374bn (+63.9% YoY) Global expansion in demand for testers serving AI semiconductors. Blackwell and next-generation Rubin from NVIDIA form the core. Previous H2 already set record highs: revenue +60.0%, operating profit +145.0%. NEC 6701 ¥3.42tn Adjusted operating profit ¥330bn (+14.9% YoY) AI agent business centred on proprietary LLM “cotomi” expanding. Capturing domestic AI demand across financial, medical, and public sectors. Previous H2 operating profit +165.3%. Tokyo Electron 8035 Low ¥2tn range (full year) Rakuten Securities forecasts profit growth; bullish medium-to-long term maintained 2nm mass production (latter half of Reiwa 7) and 1.6nm (latter half of Reiwa 8) provide tailwinds. Growing diversity of AI semiconductor types and expanded production of Chinese AI semiconductors drive manufacturing equipment demand into an expansionary phase. Fujikura 5803 Revenue +13.7% YoY (post upward revision) ¥61bn (+28.1% YoY) North American data centre wiring and cabling the principal driver. AI-related power and cable demand entering a phase of full-scale fruition. These figures demonstrate that AI is a growth industry underpinned by genuine end demand. The share price correction represents an adjustment of expectations, not of demand — such is the fundamental assessment of the Kanda-kai Securities Division. Official Commentary — Kanda-kai Securities Division: Long-Term Growth Intact KHF Kanda-kai Securities Division — Analytical Report, 16th March, Reiwa 8 “The present correction is the growing pain of a phase transition — AI is not over; if anything, it is only just beginning.” As Reiwa 8 has progressed, voices have multiplied expressing that AI-related equities feel “dangerously overvalued” or that “the AI rally may be finished.” It is perfectly natural that a degree of caution should emerge following the experience of the sharp rally of Reiwa 6–7 and the subsequent correction. Our assessment, however, differs unequivocally. The current AI market has transitioned from a phase in which equities were bought on expectation and narrative, to one in which they are selected on the basis of whether companies are genuinely generating profits and strengthening their competitive positions. This is not the end of the rally — it is a healthy process indicative of maturation. A divergence in revenue growth rates and profit margins is emerging between those companies that are putting AI to effective use and those that are not, and a “polarisation” in which this divergence feeds directly into equity valuations has now begun. The basis for long-term growth lies in the business figures themselves. Advantest has produced an extraordinary current-term operating profit growth of +63.9% year-on-year, whilst Tokyo Electron rides the wave of structural demand represented by 2nm and 1.6nm mass production. As projected by JEITA (the Japan Electronics and Information Technology Industries Association), the global generative AI market is forecast to expand approximately twentyfold by 2030 relative