Citigroup raises Murata rating, betting on AI servers to drive passive component profits to soar According to BlockBeats, on June 30th, Citigroup upgraded Murata Productions' rating from "neutral" to "buy" and significantly increased its target price from 3900 yen to 15000 yen, citing that demand for artificial intelligence servers is reshaping the growth curve of the high-end MLCC market. In a research report released on June 29th, Citigroup stated that AI servers have much higher requirements for the amount and specifications of multi-layer ceramic capacitors than traditional servers. Ordinary server boards use approximately 2000 MLCCs, while AI server GPU boards may approach 11000 by 2026. With the increasing power consumption and current fluctuations of AI accelerators, servers require more high capacitance and high reliability components, which is driving up Murata's product portfolio and average selling price. Citigroup believes that Murata is one of the main beneficiaries of this round of changes. The bank estimates that Murata has a market share of about 50% in the high capacitance MLCC market for AI servers, leading Samsung Electric and Sunac, with advantages in yield, material technology, and high-end mass production capabilities. Murata has added about 20% of production capacity expansion beyond the regular annual expansion, and Citigroup stated that further expansion may become necessary if demand continues to rise. The profit forecast has also been significantly revised upwards. Citigroup expects Murata's operating profit to reach 440 billion yen in FY3/27, rise to 630 billion yen in FY3/28, and further increase to 800 billion yen in FY3/29. The bank stated that the profit growth mainly comes from the increase in AI server MLCC shipments and the improvement in selling prices brought about by the increase in the proportion of high specification products. However, Citigroup did not assume that Murata would raise the prices of General MLCC across the board. The report states that the company is currently more likely to improve its profit margin through an AI server product portfolio, rather than actively driving industry wide price increases. But if the supply and demand of high-end MLCC remain tight, or if competitors raise prices first, Murata may still gain additional upward space in the future. This report shows that AI transactions are spreading from GPUs and HBMs to finer hardware supply chains. For Murata, the market focus is no longer just on the smartphone and car cycle, but on whether AI servers can become the new core of profit growth.