The AI boom is transforming companies, even those known for making toilets, into AI-related stocks.
The winners of the AI era are not limited to chip companies. The AI frenzy is turning a toilet manufacturer into an AI-concept stock. TOTO, with over a century of history and renowned for its high-end smart toilets and sanitary ceramics, saw its stock surge more than 18% in a single day to a five-year high following its latest earnings report. The catalyst was its semiconductor-related business.
Alongside TOTO, companies like the monosodium glutamate producer Ajinomoto, glass manufacturer Corning, and construction machinery giant Caterpillar are being revalued by capital markets. Even some materials and chemical firms long categorized as low-growth "traditional industries" are part of this trend.
For the past few years, the AI market spotlight has been on companies like NVIDIA, Microsoft, OpenAI, and TSMC. As AI's reach extends to the foundational layers of the physical world, global tech giants are frantically expanding AI data centers. HBM and advanced packaging have become industry bottlenecks, and massive GPU clusters are consuming staggering amounts of power and cooling resources. This demonstrates that AI is a complex and vast industrial system. The deeper AI goes, the more it relies on materials, precision machining, industrial chemistry, and advanced manufacturing.
A group of companies, not originally part of the "core tech narrative" but deeply entrenched in foundational hardcore manufacturing, have suddenly become critical nodes due to AI infrastructure expansion. They are re-entering the center of capital market attention.
"AI is fundamentally reshaping industrial logic. Basic materials and high-end manufacturing are returning to the core of valuation, and capital is beginning to re-recognize the long-term value of industrial enterprises with high barriers to entry," said Zhang Yi, CEO of iiMedia Research.
**Toilet and Glass Companies Catch the AI Tailwind**
TOTO's sudden popularity is the most dramatic case. Public information shows TOTO formally entered the ceramics business in 1984, gradually applying its ceramic craftsmanship to produce precision components for semiconductor equipment. The key component TOTO capitalized on is the "Electrostatic Chuck" (ESC).
In semiconductor manufacturing, wafers undergo processes like lithography, etching, and thin-film deposition. During these precise processes, wafers must be held flat, secure, with uniform temperature, and free from contamination and deformation. This is the core function of the ESC. This seemingly humble component firmly "holds" the wafer during chip fabrication.
The ESC is a critical component in NAND flash memory chip manufacturing. However, this "side business" operated at a loss for a long time. Only in recent years has it become TOTO's most profitable segment.
In its latest earnings report, TOTO stated: "Benefiting from strong demand in the advanced semiconductor market, sales of electrostatic chucks and AD components grew, leading to significant revenue and profit increases." In the latest fiscal year, TOTO's Advanced Ceramics business reported net sales of 67.414 billion yen, up 34.0% year-over-year, and operating profit of 28.943 billion yen, up 41.7% year-over-year. This business's operating profit has now surpassed its core residential plumbing equipment business, accounting for 51% of total operating profit. Five years ago, this business accounted for less than 10% of the TOTO Group's operating profit.
QYResearch indicates the global wafer handling electrostatic chuck market size was approximately $1.716 billion in 2024 and is expected to reach $2.541 billion by 2031, with a CAGR of 5.9% from 2025 to 2031. The report shows the global wafer electrostatic chuck market is dominated by five major producers: Applied Materials, Lam Research, SHINKO, TOTO, and Sumitomo Osaka Cement, which hold a combined 92.89% market share. TOTO ranks fourth in market share.
Notably, the top three are semiconductor equipment suppliers themselves. TOTO is the only one whose main business is still selling toilets, while the fifth-ranked company's main business is selling cement.
Electrostatic chucks are consumable components. TOTO stated in its earnings briefing that due to sustained stronger-than-expected demand for NAND flash from AI data centers, ESC production capacity has been operating at full capacity long-term. The company has decided on equipment investments of approximately 30 billion yen across three plants (Chigasaki, Nakatsu, and Buzen) and is considering larger-scale investment plans to further expand production.
A similar story is unfolding at the 175-year-old American glass giant Corning. Corning initially invented glass shells for Edison's light bulbs and later became a global leader in LCD glass substrates and optical fiber. For a long time, this had little direct connection to AI. However, as hyperscale cloud service providers race to build larger AI clusters, optical fiber is now becoming the next structural constraint on AI expansion.
Corning CEO Wendell Weeks stated: "The optical fiber business lost money for nearly 20 years, but we never gave up on R&D. Now, with the explosion of AI data centers, optical fiber has become core infrastructure. The legacy of 'dark fiber' from the dot-com bubble ultimately paid off for us."
In January of this year, Meta Platforms, Inc. signed a multi-year agreement with Corning worth up to $6 billion for Corning to supply optical fiber cables and connectivity solutions for Meta's hyperscale data centers.
In May, NVIDIA announced a multi-year commercial and technology partnership with Corning. Corning will increase its U.S. optical connectivity manufacturing capacity tenfold, boost optical fiber production by over 50%, and build three new advanced manufacturing plants in North Carolina and Texas, dedicated to supplying NVIDIA's AI data centers. On the day of the announcement, Corning's stock closed at $181.57, up 12.01%, with a cumulative gain of over 250% in the past year.
Earnings reports show that in Q1 2026, Corning's Optical Communications segment revenue grew 36% year-over-year, indicating AI infrastructure demand is beginning to materially translate into results.
"AI is driving the largest infrastructure buildout of our time," said NVIDIA CEO Jensen Huang after announcing the partnership with Corning.
**A Wave of Unlikely Cross-Industry Players Enter the Fray**
TOTO and Corning are not isolated cases. Broadening the view reveals more century-old companies entering the arena through even more unconventional cross-industry paths.
Japan's Ajinomoto is famous for monosodium glutamate and frozen dumplings but also produces a key material required for AI chip packaging. Japan's Kao successfully entered the semiconductor precision cleaning field. Japanese paper manufacturer Oji Holdings developed photoresist, an extremely critical material in semiconductor manufacturing.
Taking Ajinomoto as an example, in the mid-1990s, the company discovered a resin-like substance with excellent insulating properties from a fermentation byproduct (fermented yeast liquid) of MSG production. After years of R&D, the company launched "Ajinomoto Build-up Film" (ABF) in 1999. This is an insulating material used in the packaging substrates of CPUs, GPUs, and other chips.
In the latest FY2025 earnings, the segment containing Ajinomoto's ABF saw profit grow 45.1% year-over-year to 66.2 billion yen. On May 7 local time, Ajinomoto announced it would acquire new industrial land in Kani City, Gifu Prefecture, through a wholly-owned subsidiary to construct an ABF film-type insulator production facility.
Japanese companies show a concentration in "materials + precision manufacturing." Globally, a group of "new shovel sellers for the AI industrial age" is emerging.
The industrial giant Caterpillar, known for construction machinery and diesel engines, had little association with AI. But as hyperscale data center construction accelerates, a new problem has emerged: power supply.
AI data center electricity consumption is rapidly climbing. The International Energy Agency previously predicted that global data center electricity demand could reach about 945 TWh by 2030, with AI being the primary driver of this surge.
Many hyperscale data centers are procuring diesel generators and backup power systems to ensure stable electricity supply. Caterpillar is one of the key equipment suppliers, and AI data center expansion has clearly boosted demand for its power generation equipment.
In Q1 of this year, Caterpillar's total revenue reached $17.42 billion, up 22% year-over-year, with its Power & Energy segment revenue also growing 22%. This business is widely used in industrial facilities and large computing centers. Over the past year, as AI infrastructure construction accelerated and data center power demand surged, Caterpillar raised its full-year revenue guidance.
Behind these unconventional cross-industry stories, AI is restructuring the global industrial value chain.
Manufacturing and industrial companies often have slow growth, high capital expenditure, and limited profit margins, long viewed as part of the "old economy." Now, as the AI industry shifts from "software competition" to "infrastructure competition," these companies have suddenly become AI beneficiaries.
In Zhang Yi's view, the past capital market preference for asset-light models like software and platform traffic, which undervalued asset-heavy manufacturing, was essentially a temporary and unhealthy phase. For companies from bathroom fixtures or food to enter key semiconductor materials, it is fundamentally atypical cross-industry movement driven by shared underlying industrial technologies. These companies, leveraging their long-term积累 in areas like precision manufacturing and material purification, have顺势 entered the high-end semiconductor supply chain. This is a natural extension of manufacturing fundamentals.
"The strong rise of traditional manufacturing leaders in areas like electrostatic chucks, ABF materials, and specialty optical fiber, driven by the AI wave, validates that basic materials and core components are likely to become hard barriers in the AI industry," he said.
**The Other Side of the "Unexpected Winners"**
Many "alternative AI winners" still face pressure from their traditional businesses and industry cycle risks.
Despite the extremely high profit margins of its advanced ceramics business, TOTO remains primarily a bathroom fixtures company. TOTO's main businesses, its Japanese and overseas housing equipment segments, both saw declines in revenue and profit.
In April this year, news that TOTO暂停 accepted orders for its unit baths attracted industry attention. The company stated that tensions in the Middle East and restricted navigation around the Strait of Hormuz had made the supply of some basic raw materials for unit baths extremely unstable.
Furthermore, factors like a sluggish Japanese real estate market and rising raw material costs continue to affect its traditional business profitability. If future AI server expansion slows or memory prices fall, its high-margin business could also face pressure.
For Ajinomoto, while ABF demand is strong, expanding production is not easy. Advanced packaging materials require long-term validation, have lengthy customer certification cycles, and present extreme challenges in yield control. Meanwhile, fluctuations in AI chip demand could lead to cyclical risks. Some industry analyses already view ABF as a "hidden脆弱点" in the AI supply chain.
A更大的矛盾 lies in resource allocation—traditional companies face internal conflicts over resource competition between expanding semiconductor production lines and their existing core businesses when venturing into semiconductors. Some market analysis suggests the stock price increases of TOTO and Ajinomoto carry a significant AI premium, but behind this premium is the difficult balancing act companies face between two截然不同的 industrial logics.
One view is that Japanese companies are generally cautious about large-scale capital expenditures. Having experienced semiconductor cycles, they are reluctant to expand aggressively, which further加剧了 supply紧张.
Companies like Caterpillar and Corning are also not pure AI plays. AI demand确实推动了 data center construction, but their overall businesses are still influenced by the global economic cycle, manufacturing investment, and infrastructure spending.
In other words, these are not simple stories of "AI changing destinies." More importantly, AI has made capital markets rediscover that industrial capability本身 is also a crucial part of technological competitiveness.
Comments