Removal of Biden-era AI diffusion rule positive for Nationgate
KUALA LUMPUR: The US' move to revoke and revise the Biden-era artificial intelligence (AI) diffusion rule is seen as a near-term positive for Nationgate Holdings Bhd.
The original rule, which aimed to restrict AI chip exports, was set to take effect on 15 May.
Affin Hwang Investment Bank Bhd said the US is also reportedly considering replacing the tiered approach with a global licensing regime and using it as a negotiating tool in trade talks.
"As such, the access to AI chips will likely eventually hinge on the respective government-to-government agreements with the US.
"We make minimal changes to our financial year 2025 to financial year 2027 (FY25-FY27) earnings per share (EPS) forecasts for housekeeping reasons pending further clarity on the AI chip export rule," it said.
Affin Hwang updated its valuation base year to financial year 2026 and raised the 12-month target price to RM1.73, maintaining its target price to earnings ratio (PE) of 19.4 times.
The firm also upgraded the stock to a 'Buy' call, following a 43 per cent year-to-date pullback in its share price.
Affin Hwang said Nationgate's core net profit of RM78 million for the first quarter of 2025 (1Q25) exceeded expectations, making up 45 per cent of its full-year forecast and 39 per cent of the consensus estimate.
Nationgate's performance was driven by higher-than-anticipated deliveries of AI servers.
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