Goldman Sachs: Murata Manufacturing AI MLCC Cycle Extended to 2030, Maintains Buy

Overview

This research report is based on content from a sell-side conference held by Mr. Norikatsu Nakajima, CEO of Murata Manufacturing, attended by Goldman Sachs analysts. The core conclusion is the reiteration of a Buy rating for Murata Manufacturing (on the Conviction List, CL). Although the current share price is above the target price, the firm believes the company is still in the early stages of growth, primarily driven by the largest and longest-term cycle in the MLCC industry brought about by AI, as well as the company's strategic advantages in capturing AI-related MLCC market share. Furthermore, the expansion from AI servers to edge AI and physical AI will further leverage Murata's advantages in miniaturized and lightweight components.

Core views

Extension of AI Cycle and Rise of Edge Devices: Management previously expected AI infrastructure investment to peak around 2028, but due to issues such as power shortages, expansion may continue until around 2030. Meanwhile, unique edge devices such as autonomous driving/Software-Defined Vehicles (SDV) and humanoid robots are also expected to grow significantly in the coming years. This provides further expansion opportunities for Murata's high-end MLCCs, sensors, and other compact, lightweight components, implying a potentially longer cycle. MLCC Pricing Strategy is Effectively a Price Increase: Regarding AI servers, management noted that this is not simply raising prices for the same product, but rather setting appropriate prices for new products as platforms change annually and the Bill of Materials (BOM) rises significantly. Goldman Sachs believes that while this can be described as an improvement in product mix, it is effectively a 'price reset,' i.e., a price increase. Technology Route Competition and Capacity Expansion: Regarding silicon capacitors, Murata acknowledged that TSMC, SEMCO, and itself all possess this technology. Silicon capacitors are thin, have good surface flatness, and high circuit connection reliability; whereas MLCCs are superior in capacitance and customer ease of use. Murata stated it is developing MLCCs with high connection reliability to address both technology paths. In terms of capacity, the additional JPY 80 billion in capital expenditure is specifically for high-unit-price AI applications, and in many cases, capacity can be expanded by adding only partial processes to existing production lines, implying high investment recovery efficiency. AI Server MLCC Market Structure: Murata pointed out that within the Total Addressable Market (TAM) for MLCCs in AI servers, low-voltage, high-capacitance cutting-edge products account for a large proportion. The largest TAM is for GPU/ASIC boards, followed by vertical power delivery, and then network switches. The TAM for high-voltage, high-capacitance primary/secondary power supplies is limited.

Analysis framework

Goldman Sachs directly obtained first-hand guidance from management on industry cycles, pricing power, the competitive technology landscape, and capital expenditure efficiency by participating in face-to-face meetings with company executives. The analytical logic focuses on verifying the sustainability of AI as the largest long-term driver for the MLCC industry and assessing Murata's competitive barriers in the high-end product sector (such as pricing power and technological adaptability). For valuation, an EV/GCI method linked to CROCI/WACC is employed, granting a premium relative to the industry average to reflect its high-quality growth attributes.

Methodology notes

• Valuation MethodEV/EBITDA valuation

  EV/GCI vs. CROCI/WACC Valuation Framework

  Goldman Sachs uses the Enterprise Value to Gross Capital Invested (EV/GCI) ratio, combined with the difference between Cash Return on Capital Invested and Weighted Average Cost of Capital (CROCI/WACC), to assess valuation reasonableness. This method aims to measure the company's ability to generate excess returns and assigns higher valuation multiples to companies with high returns.

• Industry/Sector Analysis FrameworkSupply and Demand Framework

  AI-Driven MLCC Supply/Demand and TAM Breakdown

  By analyzing the differences in MLCC demand across various AI server components (GPU boards, power supplies, switches), the Total Addressable Market (TAM) is broken down. Simultaneously, the efficiency of supply-side capacity expansion and investment returns are evaluated to determine industry prosperity and the company's profit potential.

• Competition and Strategy FrameworkMoat / competitive advantage

  Technology Path Adaptability and Pricing Power

  Evaluates the company's ability to respond to substitute technologies (such as silicon capacitors) by developing high-reliability MLCCs, as well as its ability to achieve effective price increases through new product pricing during platform iterations. This is key to maintaining its competitive advantage and profit margins.

Asset mapping & comparison

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

• Murata Manufacturing (6981.T)

  Beneficiary: Extended AI infrastructure investment and edge device growth driving high-end MLCC demand

  Strengths

  Leading high-end MLCC technology, strong pricing power (effective price increases), efficient capacity expansion, capable of competing with silicon capacitors

  Weaknesses

  Current share price exceeds target price, presenting downside risk

  Risks

  Decline in smartphone production volume, deterioration in MLCC supply and demand, appreciation of the Japanese Yen

Key data

• 12-Month Target PriceJPY 5,400Based on FY3/28E EV/GCI vs. CROCI/WACC, granting a 50% premium to the industry multiple of 8x
• Implied FY3/27E P/E23xValuation level corresponding to the target price
• Additional Capital ExpenditureJPY 80 billionDedicated to high-unit-price AI applications, expected to be recovered efficiently
• AI Investment Peak ForecastAround 2030The originally expected 2028 peak may be delayed due to issues such as power shortages
• Current Share PriceJPY 8,077As of market close on May 26, 2026

Impact & implications

The report believes that Murata Manufacturing is in the early stages of its growth phase. AI represents not only the largest potential cycle for the MLCC industry but also a long-term one. With its strategy and competitiveness, Murata is poised to capture a significant share of the AI-related MLCC Total Addressable Market. Furthermore, as AI expands from server infrastructure to edge AI and physical AI, Murata's advantages in miniaturized and lightweight components will be fully leveraged. Although the current share price is above the target price, the firm maintains a Buy rating based on long-term fundamentals.

Risks

• Decline in smartphone production volume
• Deterioration in MLCC supply and demand conditions
• Appreciation of the Japanese Yen

What to watch

• Whether AI infrastructure investment indeed extends to 2030
• Growth rate of edge devices (autonomous driving, humanoid robots)
• Actual recovery efficiency of the additional JPY 80 billion capital expenditure
• Sustainability of MLCC new product pricing power