AI investment play requires careful portfolio selection

THE recent quarterly financial results of companies on Bursa Malaysia suggest the clear winners of the artificial intelligence (AI) megatrend thematic – which is being played out most visibly through the large and many data centre (DC) investments – are the banks, energy suppliers, land sellers and construction companies building the infrastructure.

There is a cascading impact down to other companies in the ecosystem, but the financial gains are quite small for some.

Nationgate Holdings Bhd, Nvidia’s sole contract manufacturer in South-East Asia for the NH8230 AI server, posted an operating loss of RM8.4mil for the first quarter ended March 31 (1Q26) due to lower sales.

Its revenue for the quarter fell by RM1.1bil year-on-year to RM1.7bil from its data computing segment, its exchange filing revealed, eating into the thin margins the company was making.

After pivoting into the AI Space in 2004, Systech Bhd’s revenue surged by over 700% y-o-y to RM274.6mill in its final quarter primarily due to new contracts, especially in DC infrastructure solutions. The company turned around to post a pre-tax profit of RM257,000 for its fourth quarter ended March from a loss before tax of RM4.9mil for the same period a year earlier.

Much like Nationgate, Systech’s profit margin remains slim, less than 0.4% while many industry peers in the information technology sector target higher net profit margins, often in the 5% to 15% range, depending on their business mix and scale.

Nevertheless, the smart money was in the tech sector in the first half of 2026. Despite the scare triggered by the Iran War, the sector decoupled from the general market fairly quickly into the conflict, as global investors found the AI thematic is a safe haven supported by the hundreds of billions in capital expenditure money and sustainable earnings growth to back industry leaders like Nvidia and Microsoft and AI supply line names like Samsung and SK Hynix.

This has only added to the concentration risk that has been highlighted by many.

So, while the United States and China are building the AI brains, nations like Malaysia are benefiting in various ways.

Investing in the thematic on Bursa Malaysia, however, needs investors to be very discerning on choosing the potential gainers.