KDDI (KDDIY) AI Stock Analysis

KDDI

(Other OTC:KDDIY)

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Rating:66Neutral

Price Target:$21.50▲(19.37% Upside)

Action:downgraded

Date:08/18/26

The score is driven primarily by solid underlying profitability but constrained by increasing leverage and weaker recent free-cash-flow trends. The latest earnings call adds support due to strong Q1 growth, improving mobile KPIs, and AI/cloud momentum, while technicals are mixed and valuation looks reasonable rather than compelling.

Positive Factors

Improving mobile customer economicsHigher mobile ARPU alongside lower churn and a growing smartphone base indicates improving customer monetization and retention. These trends strengthen KDDI’s recurring communications revenue, support lifetime customer value, and provide a durable base for selling additional digital services.

Negative Factors

Rising financial leverageThe sharp rise in debt relative to equity reduces financial flexibility and makes KDDI more exposed to refinancing costs or weaker cash generation. Higher leverage may constrain capital allocation as the company simultaneously funds technology expansion and maintains shareholder distributions.

KDDI (KDDIY) vs. SPDR S&P 500 ETF (SPY)

Market Cap: $70.91B
Dividend Yield: 2.54%
Average Volume (3M): 153.78K
Price to Earnings (P/E): 14.4
Beta (1Y): 0.12
Revenue Growth: 0.91%
EPS Growth: 15.30%
Country: US
Employees: 73,198
Sector: Communication Services
Sector Strength: 60
Industry: Telecommunications Services

KDDI Business Overview & Revenue Model

Company Description

KDDI Corporation is a prominent telecommunications firm headquartered in Tokyo, Japan, offering a broad spectrum of communication solutions to both domestic and international markets. Its business is strategically divided into two core segments: Pers...

How the Company Makes Money

KDDI primarily makes money by selling connectivity and related services to consumers and businesses in Japan. Its largest recurring revenue stream is telecommunications service revenue from mobile subscriptions (voice and, especially, data plans) und...

KDDI Earnings Call Summary

Earnings Call Date:Aug 06, 2026(Q1-2027)|% Change Since:-1.76%|Next Earnings Date:May 11, 2026

Earnings Call SentimentPositive

The call reported robust top-line and bottom-line growth in Q1, clear improvements in mobile KPIs (active devices, ARPU, churn), strong momentum in AI/cloud/data center businesses, improved cash generation and a proactive divestment program to fund growth. Key challenges include pressure in the Financial Business from mark-to-market losses and deposit/liquidity management, termination of Rakuten roaming creating some revenue uncertainty, a security incident with regulatory implications, and significant near-term capex/investment needs. On balance, the positive operational and financial momentum and concrete measures to fund growth outweigh the manageable and clearly articulated risks.

Positive Updates

Revenue and Profit Growth

Operating revenue up 5.1% year-on-year in Q1 with a 23.2% progress rate vs full-year forecast; adjusted operating income up 21.1% (progress 26.0%); adjusted net income up 21.6% (progress 26.5%).

Negative Updates

Financial Business Earnings Pressure

Au Financial Holdings operating income declined JPY 3.7 billion YoY in Q1; driven by mark-to-market valuation losses related to rising long-term interest rates (roughly JPY 2.4 billion) and challenges in increasing deposit balances; the bank is in a transition with liquidity and loan mix controls.

Company Guidance

KDDI said Q1 delivered a strong start to FY3/27 with operating revenue up 5.1% YoY (progress vs full‑year forecast 23.2%), adjusted operating income up 21.1% (progress 26%) and adjusted net income up 21.6% (progress 26.5%); key KPIs include 33.3m active smartphones (+390k YoY), churn 1.17% (‑0.06pp YoY) and mobile ARPU ¥4,400 (+¥160, +3.8%), and management reaffirmed its full‑year communication revenue target of ¥1,210bn. Segment trends: Personal Growth Q1 op. income +9.3% YoY, Business Growth +21.6% YoY; Au Financial Holdings op. income down ¥3.7bn (including ~¥2.4bn mark‑to‑market impact on loans); AI/cybersecurity revenue +19.2% YoY, cloud infra revenue >+30% YoY, Connectivity/Data Center revenue +20.6% YoY with Data Center adj. op. income ¥6.9bn (+¥0.7bn YoY) and EBITDA margin >40%. Cash and investment metrics: operating cash flow margin 21.6%, 11 divestments decided in Q1 generating ~¥150bn, a ¥1tn growth‑investment framework over 3 years and organic CapEx target near 12% of sales; noted one‑off items included a ~¥800m Q1 roaming revenue effect related to Rakuten and promotional spend reductions (≈2/3 of non‑comm profit improvement).

KDDI Financial Statement Overview

Summary

Income statement strength (steady revenue, solid telecom margins, healthy net margin) is partly offset by rising leverage (debt-to-equity up to ~1.03 TTM) and weaker recent free-cash-flow momentum (TTM FCF down sharply and modest coverage of the debt burden).

Income Statement

78Positive

Balance Sheet

62Positive

Cash Flow

55Neutral

Financial statement breakdown
Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	6.27T	6.44T	5.92T	5.75T	5.67T	5.45T
Gross Profit	2.68T	2.75T	2.51T	2.43T	2.41T	2.46T
EBITDA	1.86T	1.86T	1.78T	1.62T	1.71T	1.78T
Net Income	761.79B	749.76B	685.68B	637.87B	679.11B	672.49B
Balance Sheet
Total Assets	18.73T	19.15T	16.88T	14.15T	11.92T	11.08T
Cash, Cash Equivalents and Short-Term Investments	781.73B	1.08T	921.17B	887.21B	844.97B	1.12T
Total Debt	5.26T	5.40T	4.55T	2.39T	1.65T	1.74T
Total Liabilities	13.12T	13.53T	11.23T	8.35T	6.25T	5.57T
Stockholders Equity	5.09T	5.10T	5.13T	5.25T	5.12T	4.98T
Cash Flow
Free Cash Flow	642.39B	1.28T	958.47B	956.97B	444.74B	793.08B
Operating Cash Flow	1.05T	1.71T	1.25T	1.71T	1.08T	1.47T
Investing Cash Flow	-1.01T	-1.15T	-1.18T	-832.43B	-732.48B	-761.59B
Financing Cash Flow	-404.67B	-577.29B	-33.55B	-476.48B	-669.84B	-727.26B

KDDI Technical Analysis

Technical Analysis SentimentNeutral

Last Price18.01

Price Trends

50DMA18.69Negative

100DMA18.11Negative

200DMA17.46Positive

Market Momentum

MACD-0.21Positive

RSI42.77Neutral

STOCH13.37Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KDDIY, the sentiment is Neutral. The current price of 18.01 is below the 20-day moving average (MA) of 18.23, below the 50-day MA of 18.69, and above the 200-day MA of 17.46, indicating a neutral trend. The MACD of -0.21 indicates Positive momentum. The RSI at 42.77 is Neutral, neither overbought nor oversold. The STOCH value of 13.37 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for KDDIY.

KDDI Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

KDDIY against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CHT	80Outperform	$38.05B	35.95	8.91%	3.29%	-10.33%	-10.39%
KDDIY	66Neutral	$66.52B	14.43	14.91%	2.54%	0.91%	15.30%
KT	66Neutral	$8.37B	8.01	7.21%	4.85%	5.40%	39.37%
SKM	65Neutral	$11.94B	22.97	5.74%	2.10%	-7.65%	-32.07%
TLK	63Neutral	$10.82B	11.43	13.16%	10.99%	-3.37%	-27.49%
VOD	63Neutral	$36.97B	-72.26	-0.79%	3.38%	16.69%	87.12%
Sector *	60Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%

* Communication Services Sector Average

Performance Comparison

KDDIY and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
KDDIY	Kddi Corp.	18.01	2.04	12.77%
CHT	Chunghwa Telecom	48.99	7.69	18.61%
KT	KT Corporation	17.28	-1.42	-7.59%
TLK	P.t. Telekomunikasi Indonesia Tbk.	11.17	-7.83	-41.20%
SKM	Sk Telecom	30.28	10.18	50.65%
VOD	Vodafone Group Plc	15.88	4.93	44.98%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.

Date of analysis: Aug 18, 2026

KDDI AI Stock Analysis