Internet & Media: 2H26 Investment Strategy: AI Embedded in Services to Drive Earnings Growth; Recruit, LY and Mercari Stand Out
Report Coverage
- Broker
- Morgan Stanley
- Region
- Japan
- Sector
- Finance & Macro, Media & Culture
- Report Type
- Industry Report
- Primary Focus
- AI-driven earnings growth in Japan Internet & Media
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Report Summary
Morgan Stanley MUFG's 2H26 investment strategy for Japan's Internet & Media sector highlights AI integration into services as a key earnings growth driver. The report provides detailed earnings forecasts and valuations for 12 covered companies, with Overweight ratings on Recruit Holdings, LY Corporation, and Mercari as top picks, citing margin expansion, AI-enabled service enhancement, and favorable risk-reward profiles.
Key Takeaways
- AI is increasingly embedded in Internet & Media services, driving operational efficiency and earnings growth across the sector in 2H26
- Recruit Holdings (OW, PT ¥15,000) is the top pick, with HR Tech margin improvement, diversified portfolio stability, and expected large-scale share buybacks
- LY Corporation (OW, PT ¥500) benefits from high-single-digit EBITDA organic growth, PayPay's ~20% YoY revenue expansion, and commerce segment margin improvement
- Mercari (OW, PT ¥5,000) sees accelerating domestic EC GMV growth, fintech profitability expansion, and an attractively low valuation relative to earnings growth outlook
- SoftBank Group (EW, PT ¥8,000) has ARM accounting for over 40% of total assets, making AI-related business exposure a key NAV driver
- Japanese EC market continues to grow at mid-single digits, with B2C EC penetration rising toward 10.3% by 2027; Internet advertising is projected to reach 60% share of total ad spend by 2028
Why This Report Matters
This report provides a comprehensive 2H26 investment framework for Japan's Internet & Media sector, identifying AI-driven service enhancement as a structural earnings catalyst and highlighting Recruit, LY, and Mercari as best-positioned beneficiaries with attractive risk-reward.
Topics Covered
Companies Mentioned
Who this summary is for
This summary is for users researching the Morgan Stanley Internet & Media report. It helps users review Internet & Media: 2H26 Investment Strategy: AI Embedded in Services to Drive Earnings Growth; Recruit, LY and Mercari Stand Out coverage, key takeaways, and related broker or sector research paths across AI integration in internet services, Japanese e-commerce market growth, Internet advertising market share shifts; Recruit Holdings, LY Corporation.
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