Goldman Sachs DISCO (6146.T): Briefing Takeaways on Strong Equipment Demand for Generative AI; Reiterate Buy
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Goldman Sachs reiterates its Buy rating on DISCO (6146.T) with a 12-month target price of 86,000 yen, offering 14.9% upside from the current price of 74,830 yen. Following a strong earnings briefing, management highlighted that equipment demand driven by generative AI continues to strengthen, setting the stage for significant year-over-year growth in FY3/27. To address surging production needs, DISCO deployed around 100 engineers from headquarters to manufacturing sites starting in late 2025. Management expects this high utilization rate to persist for approximately one year. Notably, customers are prioritizing equipment volume securing over price negotiations, limiting cost pressures and supporting profitability. While traditional semiconductor production equipment investments are gradually recovering alongside advanced packaging consumables, the primary catalyst remains robust generative AI demand. DISCO indicated that procurement risks for petrochemical-derived components due to Middle East tensions are manageable. The company prioritizes securing quantities even if costs rise marginally, though the overall impact on the cost of goods sold remains limited. Despite the strong performance, shares dipped approximately 3% in early trading on April 23. Goldman views this pullback as an attractive entry point, noting that market earnings expectations are poised to rise given multiple structural growth drivers, including back-end process automation and advanced bonding equipment.