Edge Weekly
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KUALA LUMPUR (Nov 14): Is the artificial intelligence (AI) boom losing steam, or is the latest technology sell-off presenting investors with a buying opportunity?
The sharp correction in global technology stocks on Nov 5 has reignited concerns over the sustainability of the AI investment boom, with semiconductor stocks bearing the brunt of the selling. Investors are weighing the implications of shifting US political dynamics following the midterm elections, uncertainty surrounding Nvidia’s leadership and the prospect of higher interest rates.
Yet, fund managers remain divided on whether this marks a fundamental turning point or merely a shakeout of crowded positions. Strong cloud revenue growth, rising demand for computing capacity and continued hyperscaler spending suggest that the underlying AI investment thesis remains intact.
The bigger concern is whether the industry can sustain its massive infrastructure spending without putting excessive pressure on cash flows and financing costs.
For Malaysian investors, the debate is particularly relevant. The Bursa Malaysia Technology Index has retreated from its October peak but still commands a premium valuation, trading at a trailing price-earnings ratio (PER) of about 50 times and a forward PER of nearly 29 times. With valuations hinging on earnings growth of 20% to 30%, companies have little room to disappoint.
As the AI trade enters a more selective phase, which semiconductor players are best positioned to deliver sustainable growth? And are there better opportunities in other sectors as investors reassess their exposure to technology stocks?
Find out what fund managers are saying, how they are positioning their portfolios and where they see opportunities in the latest issue of The Edge Malaysia Weekly.
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