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Investing.com-- Morgan Stanley analysts on Wednesday downgraded their rating on Japanese Nvidia supplier Ibiden Co Ltd (TYO:4062), stating that the stock had limited upside after nearly tripling in value since February.
On the other hand, MS upgraded its rating on electronics component maker Murata Mfg Co (TYO:6981), citing bets on higher demand from the artificial intelligence industry.
MS downgraded Ibiden to Equal Weight from Overweight, and raised its price target to 13,000 yen from 9,500 yen.
The brokerage said that after the stock surged some 179% since February, additional upside was now likely to be limited.
Still, MS expects earnings to remain underpinned by strong demand and rising unit prices for the key chip and server components that Ibiden supplies to NVIDIA Corporation (NASDAQ:NVDA), and this trend is only expected to improve with every generational upgrade by the chipmaker.
Ibiden’s stellar rally this year was driven chiefly by optimism over the company’s exposure to AI, and its role as a key chip packaging supplier to Nvidia.
But MS warned that a severe bear case was that sales and demand do not pick up as strongly as expected, which in turn could be insufficient to offset higher depreciation.
MS hiked its rating on Murata Manufacturing to Overweight from Equal-weight, and also raised its price target to 3,850 yen from 2,700 yen.
The brokerage said increasing demand for high-voltage electronics components, from AI data centers, was likely to underpin Murata’s earnings in the coming quarters.
MS sees Murata’s Multilayer Ceramic Capacitor (MLCC) business driving a bulk of its earnings in the coming quarters, especially given that the company holds a just over 40% global share in the market.
AI-driven demand for MLCCs is likely to tighten supplies in the coming year, MS said, especially as global AI hyperscalers build out their data center ambitions.
But MS also sees Murata maintaining stable supply in 2026-2027, on the back of steady capacity increases, redundancies in supply networks and, and the potential for even more capacity through new plants in the Philippines, Thailand, and Japan.
Murata shares are trading up 20.9% so far in 2025, with the stock having sharply trimmed its YTD gains since late-October, amid a broader rout in tech.
Still, MS and scores of other analysts expect outsized demand from the AI industry to continue underpinning earnings and valuations for chip and electronics stocks.