PETALING JAYA: The ongoing artificial intelligence (AI) supercycle remains a leading growth driver in Malaysia’s technology sector, as analysts continue to favour companies with exposure to expanding AI infrastructure-led demand.
CIMB Research said it sees selective opportunities within Malaysia’s AI infrastructure, particularly picks-and-shovels beneficiaries that are able to convert AI-related demand into orders and recurring revenue.
Following recent meetings with Malaysian and Singaporean institutional investors, it said domestic investors were broadly bullish on the sector, bolstered by widening AI exposure across the value chain.
However, overseas investors were notably more cautious, given the sector’s strong share price performance, especially amid the July 2026 pullback in the Nasdaq and Philadelphia SE Semiconductor Index.
Despite this, it said the FBM KLCI’s potential expansion from 30 to 50 constituents in 2027 could provide a fresh catalyst.
It maintained its “overweight” call on the tech sector, projecting a three-year revenue compound annual growth rate (CAGR) of 10% across 2025 to 2028.
This is supported by a broad-based recovery across the automated test equipment (ATE), outsourced semiconductor assembly and test services (OSAT), and electronics manufacturing services (EMS) sub-sectors.
It also forecast an overall core net profit CAGR of 30% over 2025 to 2028 for the sector, anticipating EMS earnings will bottom out in 2026 before recovering in 2027.
“The ATE sub-sector is poised to lead with a projected 60% core net profit CAGR (2025 to 2028), followed by the EMS (plus 40%) and OSAT (plus 20%) sub-sectors.”
CIMB Research highlighted the recently announced Wolfspeed-LITEON partnership, which it said further validates widening adoption of silicon carbide into hyperscale AI infrastructure.
“This reinforces our view that AI power management could emerge as an increasingly important growth pillar for Malaysian semiconductor players exposed to wide-bandgap power devices,” it added.
Among its top sector picks is Malaysian Pacific Industries
Bhd. CIMB Research maintained its “buy” recommendation on the stock with a target price of RM57 per share.
It also highlighted Vitrox Corp Bhd, keeping its “buy” rating with a target price of RM10. TA Research, meanwhile, held a “neutral” stance on Malaysia’s semiconductor sector. Its top pick is Dagang Nexchange Bhd, with a “buy” call and a target price of 66 sen.
