KUALA LUMPUR (Nov 5): Any pullback in technology stocks following the US midterm elections could present a buying opportunity, said BIMB Securities, which expects long-term demand for artificial intelligence (AI) infrastructure to persist.
Sentiment towards AI and data centre-linked technology stocks could be choppy as investors reassess expectations for infrastructure deployment, amid concerns that a Democrat-led House and Senate in the US could push for tighter oversight of the technology industry.
However, BIMB believes these concerns are centred more on deployment timelines than underlying demand, given the continued investment commitments of major hyperscalers such as Microsoft Corp, Amazon.com Inc, Meta Platforms Inc and Alphabet Inc.
“Any moderation in activity is more likely to be reflected through project delays rather than a meaningful reduction in spending,” the research house said in a note.
On Bursa Malaysia, the Bursa Malaysia Technology Index fell 2.7% in early trading on Thursday, while the benchmark FBM KLCI rose 1.2%.
Technology heavyweights were broadly lower, with ViTrox Corp Bhd (KL:VITROX) falling 38 sen or 3.5% to RM10.52, while Malaysian Pacific Industries Bhd (KL:MPI) shed RM1.60 or nearly 4% to RM39.02.
Outsourced semiconductor assembly and test (OSAT) service provider Inari Amertron Bhd (KL:INARI) also fell 14 sen or 5.7% to RM2.32, its lowest level in more than two months.
Despite the near-term weakness, BIMB named ViTrox among its preferred picks in the technology sector, alongside Inari, which has low exposure to data centres but sees smartphone ecosystem demand to drive earnings.
The research house maintained its ‘hold’ recommendation on ViTrox with a target price of RM10.30, citing the company’s sizeable order backlog and healthy pipeline in semiconductor inspection and machine vision solutions, which provide earnings visibility over the next few quarters.
BIMB also maintained its ‘buy’ call on Inari with a target price of RM2.90.
Both companies are also among the leading candidates for inclusion in the proposed expanded FBM KLCI, which could provide an additional catalyst for investor interest, BIMB noted.