SK Hynix Is Set to Surf AI Wave as Rivals Confirm Growing Demand

(Bloomberg) -- SK Hynix Inc. will have to contend with high expectations when it reports this week after solid earnings from the likes of Micron Technology Inc. cemented optimism about demand for artificial intelligence chips.

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Micron’s surprisingly strong sales forecast last month spurred optimism about SK Hynix’s earnings outlook, Bloomberg Intelligence said. However, there are signs that some of the fanfare surrounding AI stocks may be fading after Taiwan Semiconductor Manufacturing Co. scaled back its outlook for a chip market expansion.

Luxshare Precision Industry Co., which gets about three-quarters of revenue from Apple Inc., will be watched closely after iPhone sales slumped 9.6% in the first quarter. While full-year revenue growth is projected to have slowed to 10% from 39% the year before, BI said market share gains for iPhone-related orders may bring an upside surprise.

Japan’s largest investment bank, Nomura Holdings Inc., probably returned to earnings growth in the year through March after three years of shrinking profit, supported by an equity market revival in Japan. India’s HDFC Bank Ltd. missed fourth-quarter profit estimates due to a provision aimed at building a countercyclical buffer and enhancing its balance sheet. Still, a sequential expansion in margins and improvement in other profitability metrics were seen as a positive for the sector.

Highlights to look out for:

Monday: Reliance Industries (RELIANCE IN) should post 2.2% quarterly profit growth as weakness in its oil-to-chemicals business partly offset better performance at its telecom and retail ventures. The conglomerate is in talks with Tesla Inc. about building a manufacturing facility in India, according to a Hindu BusinessLine report.

Tuesday: Nidec (6594 JP) may meet its full-year sales and operating profit guidance, helped by industrial machinery and robot sales. The Japanese automotive components maker’s share price should be supported by a more stable earnings outlook, Jefferies analysts said. Demand for electronic auto parts in Japan may remain sluggish in the wake of Daihatsu’s emission certification scandals.

Wednesday: Luxshare Precision’s (002475 CH) annual adjusted profit is seen rising 21%, estimates show, boosted by order wins in the iPhone supply chain. The company’s deal to take control of an iPhone assembly site run by rival Pegatron, announced in December, will help it ramp up assembly of the iPhone Pro and Pro Max models, Morningstar said in a note last month.

• Prada’s (1913 HK) first-quarter revenue is projected to rise 9.7%, led by the Japan and Asia-Pacific regions. The weak yen probably spurred local demand and tourist spending in Japan, said BI. The Miu Miu brand should continue to fare well thanks to its popularity among younger Chinese consumers, Jefferies added.

• Hindustan Unilever’s (HUVR IN) fourth-quarter revenue is expected to climb around 2.9%, consensus shows, although rural demand has been uneven and urban consumers grow pickier with newer players entering the market. India’s forecast of an above-normal monsoon should augur well for demand this fiscal year. The company is also mulling spinning off its ice cream business, according to the Economic Times.

Thursday: SK Hynix’s (000660 KS) operating profit will probably beat consensus thanks to its dominant market share in high bandwidth memory chips, BI said. The firm should be a beneficiary of enterprise clients increasingly shifting the data storage from hard disk drives to solid state drives for AI training purposes, Citi said.

Friday: Nomura Holdings (8604 JP) full-year net income is seen jumping 80%, consensus estimates show, buoyed by optimism about Japanese equities after the Bank of Japan scrapped its negative interest rate. Japanese financial institutions should perform strongly in the domestic retail and wholesale businesses amid the favorable climate, Citi analysts said. Nomura is expected to be the next Japanese lender to issue dollar-denominated Additional Tier 1 bonds to diversify sources of capital, BI said.

(Updates throughout)

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