KUALA LUMPUR (May 6): Technology stocks on Bursa Malaysia continued their rally, hitting a 21-month high, with growing optimism from stronger confidence in artificial intelligence (AI) demand, improving chip prices and solid earnings from major US technology companies. Analysts remain cautiously optimistic that the rally may continue in the near term.

Bursa Malaysia’s Technology Index gained 3.12% to 66.01 points on Wednesday’s close, after opening at 64.63 points.

The rally for tech stocks began in early April this year and continued to climb, with analysts noting that the sustained demand was evident in global AI infrastructure spending, specifically with the growing number of data centres. Over the past month, tech stocks have risen by about 26.1%.

Tech players such as ViTrox Corp Bhd (KL:VITROX) and Malaysian Pacific Industries Bhd (KL:MPI) were leading gains at the starting point. On Wednesday morning, MPI jumped another RM3.90 or 10.4% higher to RM41.40.

A Hong Leong Investment Bank (HLIB) analyst who declined to be named told The Edge the stock gains could be attributed to better-than-expected earnings from large US hyperscalers, which reinforced expectations that AI-related investment is still expanding.

It added that the sentiment was further supported by recent price increases announced by major global analogue chipmakers, which could improve margins for Malaysian outsourced semiconductor assembly and test (Osat) companies such as Unisem (M) Bhd (KL:UNISEM) and MPI.

According to HLIB in a research note (April 21), the broad-based nature of these price hikes is unusual and suggests suppliers are trying to pass on higher costs caused partly by AI-driven demand, tighter capacity and supply chain adjustments. This could also make it easier for Malaysian semiconductor players to raise their own prices from the second quarter of 2026, said analysts.

Another analyst from BIMB Securities who declined to be named told The Edge rising memory prices, including RAM (random access memory), reflect the need for more powerful computing systems.

As data centre development in Malaysia is still in its early stages, analysts said the sector could also support companies involved in related infrastructure, such as server imports, fibre connectivity, utilities and industrial services.

This could point to firms such as telecommunications and fibre network operators, as well as infrastructure providers, benefitting as more hyperscalers expand in Malaysia, naming Telekom Malaysia Bhd (KL:TM) and Time dotCom Bhd (KL:TIMECOM) as picks, said BIMB Securities.

Analysts also noted that talks between Apple Inc, Intel Corp and Samsung also lifted sentiment on tech, with Apple looking for alternative means to diversify its chip production.

BIMB Securities also pointed to upcoming initial public offering (IPO) listings, specifically chip designer SkyeChip Bhd, that is seeking to raise up to RM352 million to expand its operations, which could further spur demand in the technology sector.

“The domestic market outlook remains cautiously optimistic, supported by a strengthening ringgit and Malaysia's emerging role as a regional hub for data centres and artificial intelligence,” said BIMB Securities in a research note (May 4).

Analysts said they remain optimistic despite external risks such as the ongoing tensions between the US and Iran despite reports of a possible ceasefire and peace talks. 

In terms of valuations, AskEdge data shows Frontken Corp Bhd (KL:FRONTKN) leading the pack by trading at a price-to-earnings ratio of 48.9 times, followed by MPI at 38.6 multiples and Inari Amertron Bhd (KL:INARI) at 37.5 times. Although, it is important to note that these companies serve different roles across the semiconductor industry.

Read also:
Malaysian semiconductor stocks soar as Intel earnings drive global tech gains
MPI jumps over 12%, tops Bursa gainers list
Malaysia’s data centre investments resilient despite Mideast crisis; builders, utility firms and telcos to gain — RHB IB