$DNEX / 4456 (DAGANG NEXCHANGE BERHAD) : Sovereign Cloud Update

On September 30, DNeX entered into a multi-year agreement with Google Cloud to deliver sovereign cloud services in Malaysia. This strategic partnership aims to address the increasing demand for cloud solutions that meet stringent data residency, security, and privacy requirements, particularly in regulated industries such as public services, financial services, healthcare, and energy. Through GDC, DNeX will offer organisations in these sectors access to Vertex AI, bringing an AI-powered sovereign cloud to Malaysia. This collaboration opens the door to secure and transformative innovations, such as using AI and advanced analytics to deliver integrated, citizen-centric digital government services, enhance treatments for chronic health conditions, and optimise energy production in hydro and solar power plants.

Additionally, DNeX plans to embed enterprise-grade AI across its various business lines, including automating wafer fabrication and streamlining daily operations. They also intend to incorporate large language models (LLMs) into key IT service offerings, such as the National Single Window (NSW) for Trade Facilitation, iGFMAS, and eGADS. This move could enhance the competitiveness of DNeX's IT products, potentially increasing its chances of securing more government contracts, especially with the growing focus on sovereign cloud services.

Why Sovereign AI Matters

In February, NVIDIA founder and CEO Jensen Huang highlighted the significance of sovereign AI during a discussion with the UAE’s Minister of AI, His Excellency Omar Al Olama. Huang described sovereign AI—which emphasizes a nation’s ownership of its data and the intelligence derived from it—as a major opportunity for global leaders. "It codifies your culture, your society’s intelligence, your common sense, your history—you own your own data," Huang stated. The partnership between DNeX and Google positions DNeX to potentially benefit from this trend, increasing its chances of securing future government projects.

However, a research report by HLIB notes that the potential contributions from sovereign cloud services remain uncertain at this stage and are expected to begin contributing to revenue only in the second half of 2025. Currently, DNeX’s stock is trading between RM0.37 and RM0.39, with resistance at RM0.39. It's worth monitoring for future developments.