[Weekly Stock Picks] Murata Manufacturing (6981) Rebounds to Limit-Up After a 55% Plunge & Microsoft (MSFT) Soars 14% on Blowout Azure Earnings – One Stock Each From Japan and the U.S.

Hey everyone, Hirokichi here. With earnings season in full swing, this week’s “Weekly Stock Picks” features one Japanese stock and one U.S. stock that both saw dramatic price action. From Japan, I’m looking at Murata Manufacturing (6981), which has been on a rollercoaster ride tied to AI-related news. From the U.S., it’s Microsoft (MSFT), whose stock jumped after a blowout earnings report. Let’s dig into what’s driving each stock, how the share prices have moved, and what investors should keep in mind.

What kind of company is Murata Manufacturing (6981)?

Murata is a global leader in MLCCs (multilayer ceramic capacitors, components that temporarily store electricity to stabilize current), used in everything from smartphones and PCs to cars and AI servers. Murata holds roughly 40% of the global market. AI servers packed with GPUs (graphics processing units, also used for AI computation) reportedly need nearly 10 times more MLCCs than a standard server, so the expansion of data center investment by major cloud companies (hyperscalers) like Google and Amazon has become a strong tailwind for the business.

Unpacking the rollercoaster: from a limit-up buy order to a wild six months

Murata’s stock has moved dramatically over the past six months. From a mid-February low of 3,085 yen, it more than quadrupled on AI-related optimism, hitting a high of 12,895 yen on June 22. But the stock then entered a correction triggered by weakness in U.S. tech shares, falling as much as 55% to a low of 5,861 yen on July 29.

Looking at this chart, you can see how Murata’s stock has swung sharply up and down in short periods, true to its status as an AI theme stock. Today, July 31, AI and semiconductor-related stocks rallied broadly on the Tokyo market following strength in U.S. chip stocks, and Murata itself opened on a limit-up buy order before closing at 6,416 yen, up 185 yen (+2.97%) from the previous day. The same day also happened to be the release date for Murata’s first-quarter earnings for the fiscal year ending March 2027. In its most recent full-year results (fiscal year ended March 2026), net income came in at 233.9 billion yen (up 0.04% year over year), beating the company’s earlier guidance of 220 billion yen, and management is guiding for net income to grow another 25.3% to 293 billion yen in the current fiscal year (Source: Kabutan News, Nikkei).

An investor’s take on Murata Manufacturing

On the positive side, Murata holds the top global share in MLCCs, an unglamorous but essential component, and rising demand from AI servers is a real tailwind for its business, with recent earnings and guidance both pointing to continued profit growth. On the other hand, this is a highly volatile theme stock that quadrupled and then fell 55% within about six months, and it’s now rebounding again. It’s sensitive to shifts in AI market sentiment, the direction of U.S. tech stocks, and currency swings (a weaker or stronger yen), so short-term price moves can be significant. Personally, I think it’s important to separate the company’s actual business performance from the “AI theme” narrative currently driving the stock.

Microsoft (MSFT): Azure fires on all cylinders, sending the stock sharply higher

From the U.S., let’s look at Microsoft (MSFT), whose stock jumped after its July 29 earnings report. Revenue for the fiscal fourth quarter (April-June 2026) came in at $90.01 billion, above the $87.63 billion Wall Street was expecting (up 17.75% year over year). EPS (earnings per share) of $4.74 also beat estimates, up 29.86% from $3.65 a year earlier. Net income was $35.29 billion, up 29.57% year over year (Source: CNBC, Bloomberg).

What really caught investors’ attention was the growth rate of Azure, Microsoft’s cloud business. Azure revenue grew 43% year over year, beating the 40% consensus estimate and marking its fastest growth rate since early 2022. As a result, Azure’s full fiscal-year revenue topped $100 billion for the first time. The market cheered the results, and Microsoft’s stock jumped about 14% after the earnings release, pushing its market cap to roughly $3.3 trillion.

An investor’s take on Microsoft

What I like here is that AI demand is translating directly into real revenue and profit growth for the cloud business. The fact that Azure keeps growing more than 40% even at a $100 billion annual run rate is a standout result, even among AI-related companies. Diversified revenue streams from Office, LinkedIn, and gaming also add stability. That said, a word of caution: the stock’s roughly 14% pop after earnings suggests some near-term froth, and expectations are clearly running high already. Microsoft’s AI-related capital spending (on data centers, GPUs, and the like) has also ballooned to a massive scale, so it’s worth keeping an eye on how quickly that investment pays off and how it affects margins going forward.

What to watch going forward

To wrap up, here are three things I’ll be watching. (1) For Murata, the key questions are whether AI-server demand for MLCCs keeps growing, and whether the stock’s extreme volatility starts to settle down. (2) For Microsoft, its upcoming capital spending plans for the fiscal year ending June 2027, and how investors react to them, will likely be a key driver of the stock. (3) Both stocks are sensitive to macro factors like Federal Reserve policy and the broader flow of money into AI-related names, so it’s worth watching overall market conditions in addition to company-specific news.

Also check out last week’s post, “[Weekly Stock Picks] SCREEN Holdings (7735) Raises Profit Guidance and Dividend, Micron (MU) Tops $1 Trillion Market Cap on AI Memory Boom – One Stock Each From Japan and the U.S.“. For a broader look at AI servers and the data center theme, see “[Explainer] Why Data Centers Are the Beating Heart of the AI Era — 8 Notable Japanese and U.S. Stocks to Watch“.

Let’s keep at it, slow and steady. See you next time!

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* This article is for informational purposes only and does not recommend any specific investment. Please make investment decisions at your own responsibility.

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