Analysts at Bernstein have advised investors to focus on high-quality, high-yield technology stocks in Japan, despite recent market turbulence caused by tariff uncertainties. They pointed out that certain sectors, such as entertainment and IT services, have shown resilience.
Bernstein reported that Japan’s technology sector has risen by 8% this year, with entertainment and software companies performing better than others. However, the tech hardware sector has lagged behind.
While some areas, like entertainment, may appear overvalued, Bernstein analysts noted that stocks in semiconductors and factory automation are trading at historically low multiples, making them a good buying opportunity.
According to Bernstein, entertainment stocks remain a solid hedge against macroeconomic slowdowns, while semiconductor and factory automation stocks could see sharp rebounds if tariff risks decrease.
The firm recommended Tokyo Electron Ltd. (TYO:8035) and Disco Corp. (TYO:6146) as top picks in the semiconductor sector. Both companies benefit from strong demand for advanced packaging and memory equipment, and Bernstein has rated them as “Outperform.”
Additionally, analysts highlighted material companies like Ibiden Co. Ltd. (TYO:4062) and SUMCO Corp. (TYO:3436) for their value, especially with Ibiden’s strong market position due to product migration to Blackwell Ultra.
While cautioning that tech hardware and electronic equipment sectors may face short-term challenges, Bernstein emphasized the importance of selecting high-yield stocks with positive earnings momentum.
Bernstein also noted that Nintendo (TYO:7974) and Sony Corp. (TYO:6758) have strong gaming pipelines and offer a defensive investment appeal.
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