PETALING JAYA: The technology sector is expected to grow more slowly, but still remain on an upward path, as global uncertainties push companies to rethink expenditure and cost management.
Investment momentum remains intact for now, although rising energy prices and geopolitical tensions could temper the pace of expansion seen in the sector in recent years.
As BIMB Research noted, the key challenge is not a collapse in demand but a shift towards more measured capital deployment as companies adjust to a less predictable macro environment.
The brokerage pointed out that the sector’s trajectory is increasingly tied to external policy and commodity dynamics.
“The key risk is not a halt in investment, but a moderation in growth from the current exponential trajectory, particularly as rising energy costs increase pressure on margins,” BIMB Research said.
“The United States policy uncertainty remains a concern, as President Donald Trump’s tariffs, though reduced from 19% to 15%, could prompt further review or adjustments, weighing on sentiment in the sector,” it added.
BIMB Research reiterated its “neutral” stance on the technology sector.
“Despite near-term volatility and geopolitical uncertainty, we see selective accumulation opportunities during market pullbacks,” it said.
BIMB Research pointed out that demand from hyperscalers and service providers for artificial intelligence (AI) infrastructure is expected to remain relatively resilient, even in a softer macro environment.
It noted that recent results from Broadcom suggest spending momentum would remain strong as hyperscalers race to secure computing capacity for next-generation AI models.
Against this backdrop, the brokerage continues to favour companies with exposure to industrial and AI-driven demand rather than consumer electronics.
Its top picks include Zetrix AI Bhd, with a target price of RM1.30, supported by its scalable blockchain platform for digital identity and cross-border verification; and Vitrox Corp Bhd
, with a RM5.20 target price, backed by strong visibility from backlog orders.
Also rated “buy” is Dagang Nexchange Bhd, which is viewed as a potential laggard play with a target price of 35 sen, as its share price has yet to fully reflect higher oil prices.
Inari Amertron Bhd is upgraded to “buy” with a RM1.92 target price following the recent market pullback, with loading volumes expected to improve after product qualification is completed.
The recently concluded earnings season showed performance across the sector was mixed, according to BIMB Research.
Of the companies under its coverage, it said, two exceeded expectations, three were in line with forecasts, while two underperformed.
Meanwhile, one analyst said sentiment on the technology sector is currently being weighed down by the conflict in Iran.
“Geopolitical risk is hard to price in, so this is affecting even companies with strong fundamentals amid uncertainty over the impact on supply chain and energy costs,” he explained to StarBiz.
