The sharp decline in Bursa's high-tech segment presents a buying opportunity for quality technology stocks. The Technology Index declined 14.4% in the past month, underperforming the FBM KLCI, which gained 0.7%, according to Kenanga.
Analysts view favourably Inari Amertron Bhd (INARI), PIE Industrial Bhd (PIE) and Nationgate Holdings Bhd (NATGATE) for their good position with strong earnings visibility and exposure to high-growth segments like AI-related infrastructure.
PIE has secured a major server switcher customer, while NATGATE aims to deliver 1,000 AI servers by year-end. INARI is ramping up production of 800G optical transceivers to meet increasing demand for faster data transfers in data centers.
Malaysia's data center sector is expected to expand significantly. AI servers alone are estimated at RM97.8b, offering significant opportunities for local tech players. Following a 12-18 month data center construction phase, the fit-out phase is expected to begin in 4QCY24-1HCY25.
Looking ahead, Generative AI smartphones that have shifted user interactions from touch to voice (voice assistants) are expected to grow more than three-fold (364%) in 2024.
Globally, the semiconductor market is projected to experience robust growth in CY24 and CY25. As of July 2024, global semiconductor sales surged by 18.7% YoY, reaching USD 51.3b.
Overall, Kenanga has awarded an OVERWEIGHT rating for the tech sector.
