Fujikura is on a track to beat its outlook thanks to sustained demand for fiber-optic cables essential for AI data centers and a plan to raise prices, according to its top executive.

The Tokyo-based company, whose disappointing forecast triggered a broad selloff of Japanese tech stocks last month, is fielding orders from almost all U.S. hyperscalers for fiber-optic cables, CEO Naoki Okada said. That¡¯s keeping supplies tight and prompting some customers to agree to higher prices for Fujikura¡¯s topline products, he said.

¡°We supply a valuable product,¡± Okada said in an interview, adding that the company can offset constraints on production capacity with higher unit prices. ¡°We will raise prices a little more.¡±

Because artificial intelligence services require so much data, an AI data center needs far more fiber-optic cable ¡ª tiny glass strands that transmit data via pulses of light ¡ª than a conventional cloud facility. A rush to build out AI data centers has buoyed shares of Fujikura and other cable makers, such as Sumitomo Electric Industries and Furukawa Electric. Corning signed a $6 billion supply agreement with Meta Platforms and a $500 million stock deal with Nvidia.

If Fujikura¡¯s price hikes and expansion of its other operations in optical components go through as planned, ¡°the results will be very positive,¡± Okada said. For the current quarter, business is strong, he said. ¡°I think we will beat our planned targets.¡±

Shares of Fujikura are down more than 40% after hitting a record high in May. Concerns about production capacity bottlenecks, growing competition and supply chain disruptions surged after the company announced annual and three-year profit outlooks that fell far below the average of analyst estimates.

¡°We always set a conservative forecast,¡± Okada said, adding that the company has factored in worst-case scenarios such as the risk of hydrogen shortages. ¡°There is no way we will miss our annual forecast.¡±