Renesas Electronics and DISCO, both semiconductor stocks, were newly added to the 20 winning Japanese stocks for October in the rebalancing of the AI stock-selection tool ProPicks AI.
In the October JP20 rebalancing published by investment information website Investing.com, the policy called for expanding the newly added stocks while excluding financial stocks, even though financial stocks accounted for many of the gainers.
Renesas Electronics was selected for its growth potential and attractive valuation. Its latest revenue rose 24.8% year on year, while its operating margin was 32.7%, 3.7 percentage points above the median of the company’s forecasts. Demand from AI data centers, in addition to the automotive and IoT sectors, is providing a tailwind.
DISCO was selected for its highly profitable growth driven by AI demand. The company is said to have a global share of 60% to 80% in semiconductor dicing and grinding equipment. Over the past 12 months, revenue was ¥461.3 billion, operating profit was ¥198.6 billion and net profit was ¥146.0 billion, while gross margin was above 70%.
The rebalancing indicated an aim to diversify risk by reducing the weighting in financial stocks while expanding investments across a broad range of industries, including real estate, construction and pharmaceutical distribution. The portfolio is said to have been revised in light of geopolitical risks and interest-rate trends ahead of the U.S. midterm elections on 3 November.