KUALA LUMPUR: Malaysia is poised to become the largest data centre (DC) hub in the region with about four gigawatt (GW) of inventories projected to come on stream over the next four to five years, said RHB Research.
According to DC Byte, more than 1.0GW of supply is expected to come on stream over the next two years versus the current installed capacity of under 400 megawatts (MW).
About 3.0GW of capacity is in the developmental stages, and will be added progressively over the next three to five years.
RHB Research said potential DC inventory by 2028 would be 10 times more than what it took the industry to build over the last two decades.
"This would put Malaysia ahead of Singapore, Asia's largest DC metro where capacity is projected to stabilise at 1.4GW due to land scarcity and stricter conditions imposed on new builds," it said in a note.
RHB Research sees accelerated adoption of artificial intelligence (AI) catalysing demand for scalable DC infrastructure.
The firm noted that more complex AI models will translate into exponential growth in DC workloads with greater investments in graphics processing units (GPUs) to handle and process the enormous datasets to train AI models.
"The prolific cycle of investments should downplay growing concerns over an inventory oversupply, in our view," it said.
RHB Research continues to see DC-related news flow shaping market sentiment on the back of structural demand, the lower interest rate environment and multi-year investments by hyperscalers.
The firm said approvals for DC investments are expected to hit another high in 2024, ahead of the guidelines to be enacted on new builds with the investment pipeline looking strong going into 2025.
"Our preferred DC stock picks are Telekom Malaysia Bhd, Singapore Telecommunications Ltd, Tenaga Nasional Bhd, YTL Power International Bhd, Gamuda Bhd, Sunway Construction Group Bhd, IJM Corp Bhd, Sime Darby Property Bhd and Mah Sing Group Bhd," it added.