Is NTT (TSE:9432) Undervalued As AI Data Center Constraints Put It In Focus?

NTT (TSE:9432) is drawing investor attention after its subsidiary NTT DATA released a report titled Can Data Centers Keep Pace with AI? The report highlights power, supply chain, land, and labor constraints facing AI driven infrastructure.

See our latest analysis for NTT.

Despite the attention around NTT DATA’s AI infrastructure report, NTT’s share price has been softer, with the stock down over the year to date but still delivering a positive 5 year total shareholder return of 49.27%, which suggests long term holders have seen materially different outcomes from recent traders.

If AI infrastructure is on your radar and you want to see what else is moving, it could be worth scanning opportunities in 52 AI infrastructure stocks

With NTT’s share price softer this year but its 5 year total return still solidly positive, investors now face a key question: is the current valuation overlooking future AI infrastructure potential, or is the market already pricing in growth?

Most Popular Narrative: 15.8% Undervalued

Compared with NTT’s last close at ¥145.4, the most widely followed narrative points to a fair value of ¥172.77, implying meaningful upside based on its own assumptions.

NTT's investment in proprietary technologies (e.g., IOWN, advanced LLMs like tsuzumi 2, and photonics) positions it to benefit from surging connectivity and low-latency compute requirements driven by the global rollout of 5G/6G and edge computing. These developments underpin sustainable earnings growth and an expanded addressable market for high-value services, supporting future margin and EBIT expansion.

Read the complete narrative.

Want to understand why this narrative sees more value in NTT than the current share price suggests? The core assumptions link steady revenue growth, modest margin uplift, and a future earnings multiple that sits below the wider telecom peer group.

Result: Fair Value of ¥172.77 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, you also need to weigh the risk that NTT’s legacy fixed line and mobile revenues erode faster than expected, while heavy data center capex strains cash flow.

Find out about the key risks to this NTT narrative.

Another View: SWS DCF Model Points to Less Upside

While the NTT narrative and analyst targets point to a fair value of ¥172.77, the Simply Wall St DCF model tells a different story. On this view, NTT at ¥145.4 is trading above an estimated future cash flow value of ¥127.88, which would imply the stock is overvalued rather than undervalued. Which set of assumptions do you find more convincing?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out NTT for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 14 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If you are seeing mixed signals in the NTT story and are unsure which side weighs more heavily for you, take a close look at the data, consider both the risks and rewards, and then ground your own view in the full picture with 3 key rewards and 2 important warning signs

Looking for more investment ideas beyond NTT?

If you are weighing NTT but do not want to miss other opportunities, use screeners to quickly surface stocks that fit specific goals and risk levels.

• Target potential value by reviewing companies our team identifies as 14 high quality undervalued stocks based on quality fundamentals and pricing signals.
• Prioritise resilience by focusing on 51 resilient stocks with low risk scores that may better match a more conservative approach to capital preservation.
• Hunt for future standouts by scanning a screener containing 57 high quality undiscovered gems before they appear on everyone else's radar.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.