Morgan Stanley designated Samsung Electro-Mechanics (009150.KS) as its new top pick among South Korean technology stocks. The component maker replaces Samsung Electronics (005930.KS) in the bank's ranking.
The investment bank raised its price target for Samsung Electro-Mechanics to 2.62 million won. This is an increase from the previous 2.56 million won target.
Analysts maintained an Overweight rating on the stock. Surging demand for artificial intelligence data center components drove the decision.
Morgan Stanley expects AI investments to boost sales of multilayer ceramic capacitors (MLCCs). The bank also anticipates higher sales for Ajinomoto Build-up Film (ABF) substrates.
These sales could lead to earnings that surpass market expectations. This shift reflects a bullish outlook on the company's role in the expanding AI industry.