Morgan Stanley forecasts that makers of high value-added parts for smartphones in North America will likely top consensus earnings expectations for the fiscal third quarter of 2027. The brokerage attributes the expected outperformance to the continued spread of AI computing devices, which it says is supporting demand for select component categories.
Top pick and company-level views
The firm placed an overweight rating on TDK and identified the company as its top pick. Morgan Stanley expects TDK to see earnings expansion driven by its rechargeable battery business and products tied to hard disk drive applications.
Murata Manufacturing also received an overweight rating. Morgan Stanley cited increasing demand and higher utilization rates for Murata's high-value-added multilayer ceramic capacitors as the rationale for the positive stance.
Alps Alpine was rated overweight as well, with Morgan Stanley noting that the company’s high-performance camera actuators are scheduled to ramp up production during an April through June window.
Hirose Electric earned an overweight rating based on anticipated earnings expansion tied to general industrial machinery and connectors for AI servers.
Context and emphasis
The central theme in Morgan Stanley’s view is that the proliferation of AI-enabled computing devices is lifting demand for specific, higher-value components embedded in North American smartphones and related infrastructure. That demand, the bank suggests, should support earnings above current consensus for the fiscal third quarter of 2027 for the suppliers it highlighted.
What the bank is highlighting
- TDK - overweight and top pick; expected earnings growth from rechargeable batteries and hard disk drive-related products.
- Murata Manufacturing - overweight; cited rising demand and utilization for high-value multilayer ceramic capacitors.
- Alps Alpine - overweight; camera actuator production set to ramp from April through June.
- Hirose Electric - overweight; earnings expansion expected from general industrial machinery and AI server connectors.
This outlook reflects Morgan Stanley’s forward-looking expectations rather than filed results. The bank’s ratings and the production timing it mentions are presented as the basis for its stance on these component suppliers.