One of world’s biggest toilet maker Toto called ‘most undervalued and overlooked AI company’ as it uses…
Times of India
by TOI TECH DESKFebruary 20, 2026
AI-Generated Deep Dive Summary
The UK-based activist investor Palliser Capital has identified Toto, a Japanese toilet maker famous for heated toilet seats and Washlet bidets, as one of the most undervalued and overlooked AI companies. The firm argues that Toto’s advanced ceramics business, which contributes over 40% of its operating profits, plays a critical role in memory chip manufacturing—a key driver of AI growth. Palliser recently acquired a significant stake in Toto and urged the company to improve transparency and allocate capital more effectively to unlock its potential in the booming AI sector.
Toto’s ceramics expertise dates back to the 1980s when it began producing electrostatic chucks (ESCs), precision ceramic components used to hold silicon wafers during chip manufacturing. These chucks are essential for cryogenic etching, a process that carves ultra-deep channels in advanced 3D NAND chips—now stacked over 200 layers high. Toto’s ESCs are engineered to withstand extreme cold and maintain uniform wafer temperatures under harsh conditions, making them indispensable for cutting-edge memory chip production.
Palliser highlights Toto’s competitive advantage in this niche market, projecting 30% or more revenue growth for its ceramics segment over the next two years. The firm believes Toto has a five-year moat before competitors can catch up, driven by the ongoing NAND upgrade cycle and AI-driven demand for memory chips. Despite recent gains—shares have surged over 60% in the past year and nearly 40% in 2026 alone—Palliser sees significant upside potential, estimating a valuation gap of ¥554 billion ($3.6 billion).
The company’s net cash position of ¥76 billion ($496 million) presents an opportunity for better capital allocation to accelerate growth in its high-margin ceramics business. Palliser has been pushing Toto to shift focus from its slower-growing bathroom products division and invest more strategically in AI-related technologies. This move underscores the broader trend of traditional industries like manufacturing being reshaped by
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Originally published on Times of India on 2/20/2026