Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of JPY 31,880, slightly down from the previous JPY 32,000 [1][8]. Core Views - The company has adjusted its full-year revenue and profit guidance for FY2026 down by 9.6% to JPY 2.35 trillion and by 21.6% to JPY 570 billion, respectively, primarily due to changes in customer capital expenditure plans [1][2]. - Despite the downward revision in revenue and profit forecasts, the company maintains its capital expenditure guidance for FY2026 at JPY 240 billion, reflecting ongoing investments in next-generation technologies driven by AI demand [2][3]. - The report highlights that the demand for AI chips remains strong, particularly for the Rubin series, which is expected to positively impact the company's performance in the semiconductor equipment sector [1][8]. Summary by Sections Financial Performance - For FY26Q1, the company reported revenue of JPY 549.5 billion, a year-on-year decrease of 1.0% and a quarter-on-quarter decrease of 16.1%, which was below Bloomberg consensus expectations [1]. - Operating profit for the same period was JPY 144.6 billion, down 12.7% year-on-year and 21.3% quarter-on-quarter, also missing consensus estimates [1]. - Net profit attributable to shareholders was JPY 117.8 billion, reflecting a year-on-year decline of 6.6% and a quarter-on-quarter decline of 17.6%, again below expectations [1]. Revenue and Profit Forecasts - The company has revised its revenue forecasts for FY26, FY27, and FY28 down by 11.7%, 11.9%, and 12.0%, respectively, and net profit forecasts down by 17.1%, 15.8%, and 16.1% [3][7]. - The adjustments are attributed to several factors, including the correction of capital expenditure plans by leading logic customers and a cautious approach to NAND investments [1][3]. Market Outlook - The global wafer fab equipment (WFE) market size forecast for CY2025 has been raised from USD 110 billion to USD 115 billion, reflecting currency fluctuations [2]. - The report anticipates significant increases in transistor counts and storage capacities for high-end AI server modules from CY2025 to CY2027, indicating robust growth potential in the AI-driven equipment market [2]. Valuation Metrics - The company’s estimated PE ratios for FY26 and FY27 are 25.47 and 22.63, respectively, with a target price based on a PE of approximately 26.4 times FY27E earnings [8][21]. - The report also provides a comparison of valuation metrics with peer companies, indicating a competitive position in the market [21].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of JPY 31,880, slightly down from the previous target of JPY 32,000 [6][4]. Core Views - The company has adjusted its FY26 revenue and operating profit guidance downwards by 9.6% to JPY 2.35 trillion and by 21.6% to JPY 570 billion, respectively, primarily due to changes in customer capital expenditure plans [2][4]. - Despite the downward revision in revenue and profit forecasts, the company remains optimistic about the demand for AI-related chips and the potential positive impact of the Rubin series on global semiconductor equipment performance [2][4]. - The company expects the global wafer fab equipment (WFE) market size for CY2025 to increase from USD 110 billion to USD 115 billion, reflecting the impact of currency fluctuations and the anticipated growth in AI server module capabilities [3][4]. Summary by Sections Financial Performance - For FY26Q1, the company's revenue was JPY 549.5 billion, a year-on-year decrease of 1.0% and a quarter-on-quarter decrease of 16.1%, which was below Bloomberg consensus expectations by 5.4% [1]. - Operating profit for the same period was JPY 144.6 billion, down 12.7% year-on-year and 21.3% quarter-on-quarter, also missing consensus expectations by 7% [1]. - Net profit attributable to shareholders was JPY 117.8 billion, a decline of 6.6% year-on-year and 17.6% quarter-on-quarter, falling short of consensus expectations by 11% [1]. Revenue and Profit Forecasts - The company has revised its FY26 revenue forecast down by 9.6% to JPY 2.35 trillion and operating profit down by 21.6% to JPY 570 billion, citing several factors including adjustments in capital expenditure by leading logic customers and reduced investments by emerging Chinese chip manufacturers [2][4]. - The report anticipates a continued strong demand for AI chips, particularly from companies like NVIDIA, which may drive performance in semiconductor equipment [2][4]. Capital Expenditure and R&D - The company maintains its capital expenditure guidance for FY26 at JPY 240 billion, significantly up from JPY 162.1 billion in FY25, with R&D expenses set at JPY 295 billion, reflecting ongoing investments in next-generation etching, deposition, and bonding equipment [3][4]. - The report highlights that the demand for advanced logic foundry services is expected to grow, particularly as TSMC continues to increase its capital expenditures while Intel and Samsung face challenges [2][4]. Valuation Metrics - The report projects a decline in FY26/27/28 operating revenue by 11.7%/11.9%/12.0% and a decrease in net profit attributable to shareholders by 17.1%/15.8%/16.1%, with diluted EPS expected to be JPY 1,073/1,208/1,342 [4][10]. - The company is valued at approximately 26.4 times FY27E PE, based on an average PE of 22.4 times for comparable companies [4][10].

Core Viewpoint - The article discusses the advancements in AI technology and infrastructure by NVIDIA, highlighting the launch of new architectures and partnerships aimed at enhancing AI capabilities and performance in various sectors [1][2][3][4][5][6]. Group 1: AI Architecture Developments - NVIDIA is transitioning from Generative AI to Agentic AI, with future developments leading to Physical AI, indicating a significant evolution in AI capabilities [1]. - The Blackwell architecture has been fully launched, showcasing the Grace Blackwell NVLink 72 chip, which integrates 72 Blackwell GPUs and achieves 1.4 EFLOPS performance [2]. - The Blackwell Ultra NVL72 platform is set to double the bandwidth and increase memory speed by 1.5 times compared to its predecessor, paving the way for advanced AI inference [3]. Group 2: Market Demand and Procurement - The top four U.S. cloud service providers have purchased 1.3 million Hopper chips in 2024 and are expected to acquire 3.6 million Blackwell chips in 2025, indicating a strong demand for AI computing infrastructure [2]. - By 2028, capital expenditures for intelligent computing centers are projected to exceed $1 trillion, reflecting the growing investment in AI technologies [2]. Group 3: Future Product Launches - The Vera Rubin platform is anticipated to start shipping in the second half of 2026, featuring NVLink 144 technology and achieving performance levels 3.3 times greater than the GB300 NVL72 [4]. - The next-generation Rubin Ultra NVL576 is expected to launch in the second half of 2027, with performance projected to be 14 times that of the GB300 NVL72 [4]. Group 4: Strategic Partnerships and Collaborations - NVIDIA is expanding its collaboration with General Motors to develop autonomous vehicles and enhance AI model training [5]. - Partnerships with Cisco and T-Mobile aim to explore AI-native networks for next-generation 6G wireless technology [5]. - The introduction of the GR00T N1 robot model and collaboration with Google DeepMind and Disney for a physics engine indicates NVIDIA's commitment to advancing robotics [5]. Group 5: Cost Efficiency and Market Impact - The efficiency of computing power is improving at a rate of three times every eight months, leading to significant cost reductions, which benefits global cloud providers and applications [6].