Korean retail investors pile into Japan's AI parts play Murata Manufacturing

The AI investment cycle is reshuffling the rankings of Japan's most prominent stocks.

Korean retail investors are riding the same wave. After concentrating their Japanese AI bets on Kioxia Holdings over the past month, they have in the past week begun shifting attention to electronic components maker Murata Manufacturing.

According to data from the Korea Securities Depository's Seibro platform, Korean investors net purchased roughly 40 billion won (about $26.4 million) worth of Murata Manufacturing shares in the week of May 28 through June 3. The stock ranked first among Japanese equities by net purchase volume for the week and 28th globally, placing it alongside Kioxia Holdings (50th) as one of only two Japanese names in the global top 50.

The shift in investor flows tracks a broader realignment in Japan's stock market around AI-related names. SoftBank Group, seen as a platform for AI investment, has already overtaken Toyota Motor to become Japan's most valuable company by market cap. Kioxia Holdings then briefly surpassed Toyota on Wednesday morning in Tokyo, with its intraday market cap topping 45 trillion yen (about $281 billion) to claim second place on the entire Japanese market. SoftBank's rise reflects expectations for AI investment, while Kioxia's reflects demand for memory chips used in AI data centers.

Murata Manufacturing is also closely tied to the AI cycle. The company stands to benefit from expanding demand for electronic components inside AI servers, and its share price has already responded sharply — rising 103 percent over the past month, 179 percent over three months, 214 percent over six months and 404 percent over one year. Its five-year gain, by contrast, was limited to 22 percent. Rather than a traditional parts maker that has climbed steadily over the long term, Murata looks more like a stock that has rapidly priced in expectations for surging AI server component demand.

The reason Murata Manufacturing has come into focus as an AI server parts play lies in its flagship product: the multilayer ceramic capacitor, or MLCC. An MLCC is a tiny component that briefly stores electrical charge inside an electronic device and releases it on demand, while also stabilizing current flow. It is considered an essential part in products with complex electronic circuits — smartphones, electric vehicles and telecommunications equipment among them.

As AI servers proliferate, so does demand for MLCCs. AI servers run high-performance graphics processing units, large-capacity memory chips and high-speed communications equipment simultaneously, consuming large amounts of power and requiring precise management of current flow. Unstable power supply or electromagnetic noise can affect server performance and reliability, which elevates the role of MLCCs in stabilizing power delivery. According to industry estimates, a single state-of-the-art AI server contains between 15,000 and 25,000 MLCCs.

MLCCs for AI servers are more demanding to manufacture than those for ordinary consumer electronics, as they must maintain performance under high-voltage, high-temperature conditions while storing more charge in a smaller package. This is why the expansion of AI server investment is spilling over beyond semiconductor and memory chip companies to high-value-added electronic components makers.

Murata Manufacturing is considered a top-tier global competitor in this market, with an estimated worldwide MLCC market share of around 40 percent. Its edge goes beyond sheer output. The company operates a vertically integrated structure built entirely in-house, spanning ceramic material formulation, ultra-fine multilayer stacking, high-temperature firing processes and production equipment. Because MLCCs require materials, process and equipment technologies to work in concert, industry observers say the technical barriers are high enough to make it difficult for latecomers to catch up quickly.

The earnings outlook reinforces the reappraisal of Murata as an AI server parts play. In its late-April earnings release, the company projected data center-related sales of 325 billion yen for fiscal year 2026 (April 2026 through March 2027), an 84 percent increase from the prior year. Over the same period, it forecast operating profit rising 34.8 percent to 380 billion yen and net profit attributable to shareholders climbing 25.3 percent to 293 billion yen. Capital spending is also accelerating: Murata plans to invest an additional 80 billion yen in its capacitor segment, including MLCCs, to meet growing data center demand — roughly 40 billion yen in each of fiscal years 2026 and 2027.