Data Centers Enter Installation Phase, Tech & Cybersecurity Stocks Set to Lead

1. Shift to Tech Stocks: With data center projects moving from construction to the installation phase, tech stocks are expected to take the lead, replacing construction-related stocks.

2. Structural Trend: Malaysia is in the early stages of a structural trend in data centers, offering significant opportunities for construction, equipment, and tech companies.

3. Growth in Construction and Property Sectors: The construction and property sectors saw impressive growth in the first seven months of the year, driven by data center expansion.

4. Installation Phase: The installation phase, beginning late 2024 to early 2025, will involve equipping data centers with necessary infrastructure, benefiting tech companies, especially in server-related businesses.

5. Market Opportunities: The potential market for AI servers in Malaysia is estimated at RM97.8 billion, providing significant opportunities for OSAT and EMS companies.

6. Cybersecurity Focus: The expanding data center sector will increase demand for cybersecurity services, with LGMS well-positioned to capitalize on this opportunity.

7. Malaysia's Advantage: Malaysia’s favorable conditions—ample power, stable connectivity, affordable land, and multilingual talent—make it a prime location for data center expansion.

8. Kenanga's Top Picks: Kenanga’s top stock picks in this sector include $PIE / 7095 (P.I.E. INDUSTRIAL BERHAD), $LGMS / 0249 (LGMS BERHAD), and $INARI / 0166 (INARI AMERTRON BERHAD).