Murata Manufacturing becomes a core beneficiary of AI server MLCC, with target price raised sharply

Overview

This report is JPMorgan's updated company research on Murata Manufacturing, focusing on the re-rating of MLCC demand driven by AI servers, prolonged supply-demand tightness, product mix upgrades, and upward earnings revisions. The report maintains an Overweight rating and raises the December 2026 target price from ¥7,000 to ¥15,200. Although the stock had already risen 2.9x from April 1 to June 1, 2026, while TOPIX rose only 4.2% over the same period, JPMorgan believes the stock could move higher again if profitability improvement from 2H FY2026 through FY2027 is validated.

Core views

The core view is that Murata is shifting from a traditional cyclical electronic components stock to a major beneficiary of AI server MLCC demand. AI server MLCC demand is growing faster than previously expected, and high-end products such as the 1005 size / 47uF are expected to drive meaningful improvement in ASP and marginal profit margins. At the same time, industry capacity expansion is constrained by in-house equipment production and plant space, so supply-demand tightness may persist through FY2028. The report expects overall MLCC price decline pressure to stabilize as early as July-September 2026 and as late as October-December, and believes there may be potential for item-by-item price increases and for customers to shift toward smaller, high-capacity products to secure supply.

Analysis framework

The report uses a top-down analysis of AI server demand and MLCC industry supply-demand, combined with Murata's product roadmap, capacity expansion capability, customer procurement risk, price trends, and margin elasticity, to rebuild earnings forecasts for FY2026-FY2030. For valuation, the report uses FY2029 EPS and a P/E multiple relative to the industry's cyclical peak to derive the target price.

Methodology notes

• Valuation methodsRelative P/E Valuation

  The target price is based on FY2029 EPS of ¥541 and 28x P/E.

  The 28x P/E is derived from the industry average 20x P/E based on Bloomberg consensus as of June 10, 2026, multiplied by the stock's 1.4x valuation premium versus the industry at the peaks of the previous two MLCC cycles.

• Industry CycleSupply-Demand Tightness and Capacity Constraint Analysis

  MLCC industry utilization, capacity expansion, and plant space constraints determine downward price pressure and the room for price increases.

  The report believes the industry is unlikely to raise overall capacity by more than 20% given the high share of in-house equipment, and that plant space may become a constraint after FY2028, so supply-demand tightness may persist.

• Earnings ForecastProduct Mix and Marginal Profit Margin Analysis

  AI server MLCC migration toward high-end, smaller, higher-capacity products will lift ASP and marginal profit margins.

  The report emphasizes that demand for advanced products such as the 1005 size / 47uF will increase significantly from 2H 2026 through FY2028, potentially bringing higher selling prices and stronger incremental profit.

Asset mapping & comparison

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

• Murata Manufacturing (6981.T)

  Subject of the research; a Japanese electronic components and MLCC manufacturer positioned by the report as a core beneficiary of growth in AI server MLCC demand.

  Strengths

  Has advanced manufacturing technology, quality advantages, and a leading product roadmap; benefits from rising demand for high-end, compact, high-capacity products in AI server MLCC; supply-demand tightness is expected to enhance price stability and marginal profit margins.

  Weaknesses

  Capacity expansion depends on in-house equipment and plant space, with space constraint risks rising after FY2028; the stock had already risen sharply before the report, so the pace of further near-term gains may slow.

  Comparison

  The stock rose 2.9x from April 1 to June 1, 2026, significantly outperforming TOPIX's +4.2% over the same period; the valuation target references the relative industry P/E premium at the peaks of the previous two MLCC cycles.

  Risks

  The AI cycle may peak, AI data center investment may slow, memory supply-demand tightness may weaken end demand more than expected, RF FEM may lose share, battery business losses may widen again, and overly prolonged MLCC supply-demand tightness may create customer or capacity pressure.

Key data

• Current Price and Target PriceCurrent price ¥8,556; Target price ¥15,200The target price was raised sharply from the previous ¥7,000, implying upside of about 77.6%.
• RatingOverweightThe report maintains an overweight rating.
• Operating Profit ForecastFY2026 ¥411.7bn; FY2027 ¥672bn; FY2028 ¥1.0104tn; FY2029 ¥1.2670tn; FY2030 ¥1.5672tnForecasts for FY2026, FY2027, and FY2028 were raised from ¥383.8bn, ¥568bn, and ¥750.2bn, respectively.
• AI Server MLCC Sales GrowthFY2026 2.4x; FY2027 2.4x; FY2028 1.9xAI server MLCC sales are expected to rise from 5%-6% of total sales in FY2025 to nearly 40% by FY2028.
• Overall MLCC Sales GrowthFY2026 about 15% YoY; FY2026 to FY2027 over 25%; FY2029-FY2030 about 20%The report believes that even if the ASP contribution from product generation upgrades weakens in FY2029-FY2030, AI accelerator TDP GW growth will still support demand.
• Market Size AssumptionTotal MLCC market in 2025 about $10-12bn; server-related sales in FY2028 about $9-10bnServer-related sales include AI server demand.
• Industry Utilization RateExpected to exceed 90% in April-June 2026The report believes that in past cycles, utilization above 90% usually significantly reduced customer-driven price-cutting pressure.
• AI Server MLCC ASPUp 2-3x over the next two yearsDriven by migration toward advanced, higher-priced products and smaller high-capacity MLCCs.
• Valuation ParametersFY2029 EPS ¥541; P/E 28xThis implies a December 2026 target price of ¥15,200.
• Forward ValuationFY2028 P/E 21x; FY2029 P/E 17xBased on the report's estimates, the current share price remains supported by valuation even after the upgraded earnings forecasts.

Impact & implications

The report's investment implication is positive: Murata is not only benefiting from AI server shipment growth, but may also benefit from MLCC supply bottlenecks, product mix upgrades, and potential price increases. In the short term, the rally may slow because the stock has already risen sharply; however, if MLCC prices stabilize, high-end AI server product volumes ramp up, and margin improvement is validated starting in 2H FY2026, the market may continue to revise up medium-term earnings and valuation.

Risks

• The AI cycle may peak, causing AI server MLCC demand to come in below expectations.
• If AI data center investment slows materially, the assumption of sustained MLCC supply-demand tightness will be challenged.
• Memory supply-demand tightness or other factors may cause end demand to be weaker than expected.
• There is uncertainty around plant space and capacity expansion capability after FY2028.
• RF FEM may experience market share loss.
• Losses in the battery business may widen again.
• Potential price increases may fail to materialize, or may only be implemented item by item rather than broadly.

What to watch

• Whether MLCC industry utilization exceeds 90% in April-June 2026.
• Whether MLCC price declines begin to stabilize in July-September or October-December 2026.
• The ramp-up pace of high-end MLCC products such as AI server 1005 size / 47uF.
• Whether Murata can further increase capacitance capacity by an additional 10%-15% through side-forming process investment before FY2027.
• Whether plant space becomes a bottleneck for capacity expansion after FY2028.
• Whether customers accept item-by-item price increases or shift to smaller high-capacity MLCC designs to secure supply.
• Whether MLCC procurement risk for automotive OEMs and Tier 1 suppliers continues to rise.
• Whether margin improvement from 2H FY2026 through FY2027 materializes.