NVIDIA demand and new-product ramp-up strengthen Japan's AI server component chain; Goldman Sachs reiterates Buy ratings on six companies

Overview

Based on NVIDIA's FY27 second-quarter results and next-quarter guidance, this report assesses the read-across to Japanese electronic-component and semiconductor suppliers. Goldman Sachs believes AI server demand remains strong, but earnings realization at each company depends on the share of high-value-added products, price increases and product mix, customer share, operating leverage, and the commissioning of new capacity.

Core views

NVIDIA's FY27 second-quarter (May-July) revenue reached US$96.2bn, up 18% qoq and exceeding Goldman Sachs' US$93.0bn forecast, the Bloomberg consensus estimate of US$92.3bn, and the company's guidance midpoint of US$91.0bn. The company provided a midpoint of US$108.0bn for FY27 third-quarter (August-October) revenue guidance, above the Bloomberg consensus estimate of US$104.6bn but below Goldman Sachs' US$110.7bn forecast; if achieved, this would mark a 16th consecutive quarter of revenue growth. Vera Rubin is expected to contribute approximately 20% of third-quarter revenue. Rubin GPUs began shipping in August and are expected by the company to become the fastest-ramping product in its history. Vera CPUs have also begun shipping, and management expects CPU-related revenue to double in FY28. NVIDIA also guided for 70% yoy revenue growth in FY28 and indicated that supply capacity is currently the primary constraint on revenue growth. Following the results announcement, NVIDIA shares were up approximately 4% in after-hours trading as of 18:00 local time. Goldman Sachs believes these results and guidance validate NVIDIA's strong fundamentals and provide a positive read-across for the Asian AI server supply chain. The benefits for Japanese electronic-component and semiconductor companies are uneven: differences in performance primarily depend on customer share, content value, product mix, pricing, operating leverage, and capacity expansion in their respective AI/DC products. The report therefore reiterates its views on the six companies covered in the August 13 summary report. For Ibiden, Rubin substrates already account for the vast majority of GPU-related shipments, while high-value-added products supplied for NVIDIA CPUs and switches have also begun contributing. Driven by higher selling prices and a rising share of high-value-added products, the company raised its FY3/27 Electronics business operating margin guidance from 22.7% to 29.3%. Goldman Sachs is also watching whether the company raises its medium-term plan and announces additional capacity expansion; these two developments will determine whether AI demand can translate into more sustained revenue and profit growth. The core thesis for Murata and Taiyo Yuden is growth in AI server MLCC demand, product-mix improvement, and price increases. Murata raised its expected annual revenue growth for AI/DC MLCCs from 85%-90% to 100%-105%; Taiyo Yuden sharply raised its expected annual revenue growth for AI server MLCCs from 80%-85% to 150%. Goldman Sachs expects both companies to gradually reflect the effects of product-mix improvement and price increases from expanding AI/DC products in the second half, with revenue growth likely to translate further into earnings. In addition to holding an approximately 1/3 to 1/2 share of NVIDIA-related PMICs, Renesas is, according to company estimates, the sole supplier to an ASIC company, allowing it to benefit from demand for both GPU platforms and custom chips. Rohm raised its FY3/27 AI/DC revenue guidance from ¥25bn to ¥30bn due to strong Si-MOS performance in 48V DC/DC converters. Goldman Sachs expects Rohm to demonstrate operating leverage following its structural reforms and raised its earnings forecasts and target price in its August 13 report. MARUWA's growth thesis incorporates both market demand and company-specific capacity expansion. The second Seto plant, primarily serving AI applications, is expected to begin contributing to earnings in the second half of FY3/27, while the third plant is expected to commence operations in the first half of FY3/28. Goldman Sachs expects the combination of new capacity and market growth to drive rapid expansion in revenue from related applications and forecasts FY3/27 revenue to more than double yoy. On valuation, Goldman Sachs assigns 12-month target prices of ¥26,700, ¥12,900, and ¥21,300 to Ibiden, Murata, and Taiyo Yuden, respectively, all based on an FY3/29E EV/GCI and CROCI/WACC framework. Ibiden is valued at a 60% premium to the industry-average 10x EV/DACF, with the target price implying 38x FY3/29E P/E; Murata and Taiyo Yuden are both valued at an 80% premium, implying P/E multiples of 30x and 31x, respectively. Renesas' target price of ¥5,500 is based on an FY12/28E framework and 13x EV/DACF, representing a 30% premium to the industry average and implying 16x FY12/27E P/E. Rohm's target price of ¥7,200 applies a 20% premium to the industry-average 10x EV/DACF, implying 23x FY3/29E P/E. MARUWA's target price of ¥89,000 is based on FY28E EBITDA and 12.5x EV/EBITDA, with the multiple derived from the historical correlation between EBITDA margin and EV/EBITDA; the target price implies FY27E and FY28E P/E multiples of 29x and 23x, respectively.

Analysis framework

The report first compares NVIDIA's actual revenue with Goldman Sachs' forecast, consensus expectations, and the company's original guidance, then combines next-quarter guidance, the shipment cadence of Rubin and Vera, FY28 growth guidance, and supply constraints to assess AI infrastructure demand. It subsequently reviews each Japanese supplier's product exposure, customer share, pricing and mix, profitability, structural reforms, and capacity-expansion timing, and determines target valuations using each company's forward earnings and return metrics.

Methodology notes

• Industry/Sector Analysis FrameworkSupply-demand framework

  AI server demand and supply-capacity constraints

  The report assesses industry conditions based on NVIDIA's demand growth, new-platform shipments, and supply-capacity constraints, then analyzes how demand flows through to substrate, MLCC, PMIC, and power-semiconductor suppliers.

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Volume growth, higher selling prices, and product-mix improvement

  The report not only examines revenue growth from AI/DC products but also distinguishes the different contributions of shipment expansion, price increases, and a rising share of high-value-added products to revenue and margins.

• Corporate Fundamentals and Financial FrameworkOperating/Financial Leverage Analysis

  Operating leverage following structural reforms

  Goldman Sachs expects Rohm's revenue growth to translate into operating profit at a higher rate after its structural reforms are completed.

• Valuation Method

  EV/GCI and CROCI/WACC combined with EV/DACF multiples

  The target prices for Ibiden, Murata, Taiyo Yuden, Renesas, and Rohm are based on the relationship between forward returns on capital and the cost of capital, with different premiums applied to industry EV/DACF multiples to reflect each company's growth and return characteristics.

• Valuation MethodEV/EBITDA valuation

  EV/EBITDA valuation based on the historical correlation with margins

  MARUWA's target price is based on FY28E EBITDA and applies a 12.5x valuation multiple derived from the historical correlation between EBITDA margin and the EV/EBITDA multiple.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• NVIDIA (NVDA)

  Its results, new-product shipments, and growth guidance are the starting point for the report's assessment of demand in Japan's AI server supply chain.

  Strengths

  FY27 second-quarter revenue exceeded expectations, Rubin and Vera began shipping, and FY28 revenue growth guidance is 70%.

  Weaknesses

  Supply capacity is currently the constraint on revenue growth.

  Comparison

  FY27 third-quarter revenue guidance of US$108.0bn is above the Bloomberg consensus estimate of US$104.6bn but below Goldman Sachs' US$110.7bn forecast.

• Ibiden (4062.T)

  Benefits through Rubin GPU substrates and high-value-added products for NVIDIA CPUs and switches.

  Strengths

  Higher selling prices and a rising share of high-value-added products drove FY3/27 Electronics business operating margin guidance up to 29.3%.

  Weaknesses

  Growth depends on the product roadmaps of major customers and server demand.

  Comparison

  The target valuation applies a 60% premium to the industry-average 10x EV/DACF.

  Risks

  Changes in major customer roadmaps, weaker PC and server demand, and declining diesel vehicle sales.

• Murata Mfg. (6981.T)

  Benefits from expanding AI/DC MLCC demand, product-mix improvement, and price increases.

  Strengths

  Expected annual revenue growth for AI/DC MLCCs was raised from 85%-90% to 100%-105%, and the company holds Buy and CL ratings.

  Weaknesses

  It remains exposed to smartphone demand and the MLCC supply-demand cycle.

  Comparison

  The target valuation applies an 80% premium to the industry multiple of 10x.

  Risks

  Declining smartphone production, deterioration in MLCC supply-demand conditions, and yen appreciation.

• Taiyo Yuden (6976.T)

  Benefits from rapid growth in AI server MLCCs and second-half mix and pricing effects.

  Strengths

  Expected annual revenue growth for AI server MLCCs was raised from 80%-85% to 150%.

  Weaknesses

  Earnings realization depends on AI server product expansion and improvements in pricing and mix during the second half.

  Comparison

  The target valuation applies an 80% premium to the industry multiple of 10x.

  Risks

  Weaker-than-expected smartphone demand, deterioration in MLCC supply-demand conditions, and yen appreciation.

• Renesas Electronics (6723.T)

  Connected to AI server demand through NVIDIA-related PMICs and its supply relationship with an ASIC customer.

  Strengths

  It holds an approximately 1/3 to 1/2 share of NVIDIA-related PMICs and, according to company estimates, is the sole supplier to an ASIC company.

  Weaknesses

  The business remains exposed to cycles in consumer electronics, automobiles, and industrial equipment.

  Comparison

  The target price applies 13x EV/DACF, a 30% premium to the industry average.

  Risks

  A slower or delayed recovery in consumer-electronics demand, stagnant automobile production, prolonged semiconductor inventory correction, a delayed recovery in industrial-equipment demand, and yen appreciation.

• Rohm (6963.T)

  Benefits from AI/DC infrastructure growth through Si-MOS used in 48V DC/DC converters.

  Strengths

  FY3/27 AI/DC revenue guidance was raised from ¥25bn to ¥30bn, and structural reforms may unlock operating leverage.

  Weaknesses

  Earnings improvement still depends on structural reforms and the business-mix transformation progressing as planned.

  Comparison

  The target valuation applies a 20% premium to the industry-average 10x EV/DACF.

  Risks

  Further increases in precious-metal prices, delays in business-mix transformation, uncertainty regarding potential restructuring and integration plans, and fluctuations in the market value of its Toshiba stake.

• MARUWA (5344.T)

  Growth in AI-related markets and capacity expansion at the new Seto plants jointly drive revenue.

  Strengths

  Goldman Sachs expects FY3/27 revenue from related applications to more than double yoy, with the second and third plants commencing operations in stages.

  Weaknesses

  The growth trajectory depends on new capacity coming online on schedule and sustained investment in end applications.

  Comparison

  The target price applies 12.5x EV/EBITDA based on the historical correlation with margins.

  Risks

  Declining investment in end applications such as AI or general-purpose servers, xEVs, and semiconductor production equipment; weaker end demand caused by supply-chain disruptions or inventory adjustments; and the emergence of substitute technologies.

Key data

• NVIDIA FY27 second-quarter revenueUS$96.2bnUp 18% qoq; above Goldman Sachs' US$93.0bn forecast, the Bloomberg consensus estimate of US$92.3bn, and the guidance midpoint of US$91.0bn.
• NVIDIA FY27 third-quarter revenue guidanceUS$108.0bnGuidance midpoint; Goldman Sachs forecast US$110.7bn and Bloomberg consensus estimate US$104.6bn.
• Rubin's share of third-quarter revenueApproximately 20%Rubin GPUs began shipping in August and are expected to become the fastest-ramping product in the company's history.
• NVIDIA FY28 revenue growth guidance+70% yoyManagement stated that supply capacity is the current constraint on revenue growth.
• Ibiden FY3/27 Electronics business operating margin guidance29.3%Raised from 22.7%, driven by higher selling prices and a rising share of high-value-added products.
• Murata expected annual revenue growth for AI/DC MLCCs+100%-105%Previously +85%-90%.
• Taiyo Yuden expected annual revenue growth for AI server MLCCs+150%Previously +80%-85%.
• Renesas' share of NVIDIA-related PMICs1/3-1/2In addition, according to company estimates, it is the sole supplier to an ASIC company.
• Rohm FY3/27 AI/DC revenue guidance¥30bnRaised from ¥25bn, primarily driven by strong Si-MOS performance in 48V DC/DC converters.
• MARUWA FY3/27 related-application revenue forecastMore than double yoyThe second Seto plant is expected to contribute to earnings in the second half of FY3/27, and the third plant is expected to commence operations in the first half of FY3/28.
• Ibiden target valuation¥26,700; FY3/29E P/E 38x12-month target price; a 60% premium to the industry-average 10x EV/DACF.
• Murata target valuation¥12,900; FY3/29E P/E 30x12-month target price; an 80% premium to the industry multiple of 10x.
• Taiyo Yuden target valuation¥21,300; FY3/29E P/E 31x12-month target price; an 80% premium to the industry multiple of 10x.
• Renesas target valuation¥5,500; FY12/27E P/E 16x12-month target price; applies 13x EV/DACF, a 30% premium to the industry average.
• Rohm target valuation¥7,200; FY3/29E P/E 23x12-month target price; a 20% premium to the industry-average 10x EV/DACF.
• MARUWA target valuation¥89,000; FY27E/FY28E P/E 29x/23x12-month target price; based on FY28E EBITDA and 12.5x EV/EBITDA.

Impact & implications

The report believes NVIDIA's sustained growth, rapid new-platform ramp-up, and FY28 growth guidance provide clear demand support for Japan's AI server component chain. However, the degree of benefit will diverge further: Ibiden is focused on high-value-added substrates and margin improvement; Murata and Taiyo Yuden on MLCC growth, mix improvement, and price increases; Renesas and Rohm on power-management and power-device share and operating leverage; and MARUWA on both demand growth and the release of new capacity.

Risks

• Ibiden faces risks from changes in major customer roadmaps, weaker PC and server demand, and declining diesel vehicle sales.
• Murata faces risks from declining smartphone production, deterioration in MLCC supply-demand conditions, and yen appreciation.
• Taiyo Yuden faces risks from weaker-than-expected smartphone demand, deterioration in MLCC supply-demand conditions, and yen appreciation.
• Renesas faces risks from a slower or delayed recovery in consumer-electronics demand, stagnant automobile production, prolonged semiconductor inventory correction, a delayed recovery in industrial-equipment demand, and yen appreciation.
• Rohm faces risks from further increases in precious-metal prices, delays in business-mix transformation, uncertainty regarding restructuring and integration plans, and fluctuations in the valuation of its Toshiba stake.
• MARUWA faces risks from declining investment in AI or general-purpose servers, xEVs, and semiconductor production equipment; weaker end demand due to supply-chain disruptions or inventory adjustments; and the emergence of substitute technologies.

What to watch

• Watch whether NVIDIA's FY27 third-quarter revenue reaches the guidance midpoint of US$108.0bn and whether it achieves a 16th consecutive quarter of growth.
• Watch whether Rubin's share of third-quarter revenue reaches approximately 20% and monitor the speed of its product ramp-up.
• Watch whether Vera CPU-related revenue doubles in FY28 and how supply capacity constrains FY28 growth.
• Watch whether Ibiden raises its medium-term plan and announces additional capacity expansion.
• Watch whether Murata and Taiyo Yuden realize product-mix improvements and pricing effects in the second half.
• Watch whether Rohm's operating leverage becomes evident following its structural reforms.
• Watch the commencement of operations and earnings contributions from MARUWA's second Seto plant in the second half of FY3/27 and its third plant in the first half of FY3/28.