Maybank Investment Bank Group (Maybank IBG) expects growth in Malaysia’s technology sector in 2026 to be increasingly driven by artificial intelligence (AI) and data centre-related demand, while legacy segments such as automotive semiconductors continue to face downside risks despite early signs of stabilisation.
In its latest sector outlook, the research house maintained a NEUTRAL stance on the technology sector, citing a mixed earnings landscape and uneven recovery across sub-segments.
According to Maybank IBG, AI and data centre (DC) investment remains the primary growth engine heading into 2026, supported by sustained capital expenditure from global hyperscalers. However, the firm noted that Malaysia’s back-end semiconductor players are unlikely to see meaningful uplift due to their limited exposure to AI-related demand.
As a result, Maybank IBG said it prefers front-end semiconductor companies, which offer broader and more direct leverage to AI-driven wafer fabrication expansion. Automotive-exposed names, on the other hand, continue to face structural headwinds, particularly from global electric vehicle incentive rollbacks, which could lead to oversupply conditions.
“Front-end-exposed names provide a more effective proxy to AI growth,” Maybank IBG said, highlighting Frontken as a key beneficiary of ongoing AI and data centre investments. Northeast was also named among the firm’s preferred semiconductor plays.
Software sector to benefit from structural digitalisation tailwinds
Beyond hardware, Maybank IBG remains positive on the Malaysian software sector, underpinned by favourable government-led policies promoting digital adoption across both the public and private sectors. The research house views digitalisation as a secular, long-term growth theme that will continue to support earnings visibility for software players.
Its top picks within the software space are ITMAX and Ramssol, which are seen as well-positioned to benefit from rising demand for digital solutions and enterprise systems.
Cautious stance on EMS; selective opportunities remain
The research house remains cautious on the electronics manufacturing services (EMS) segment, which faced a challenging 2025 due to tariff pressures, a weaker US dollar, and limited AI exposure. While the recovery has been uneven, Maybank IBG identified ATech as its preferred EMS pick.
Overall, Maybank IBG said that while semiconductor growth may remain constrained in 2026, selective opportunities persist, particularly in front-end semiconductors and software. In contrast, software continues to gain traction amid sustained digitisation initiatives.
Maybank IBG’s top BUY calls across the technology sector are Frontken, Northeast, ATech, ITMAX and Ramssol, while it continues to maintain a NEUTRAL sector outlook.
