Update 9 July on Nvidia & YTL Power

US stocks ended Tuesday session near the flatline after President Trump offered no exceptions to his Aug 1 tariff start date.

Traders had trouble keeping up with the conflicting signals from Trump on trade. Trump on Monday pushed the tariff deadline to Aug 1 from July 9. Later that day, he said that the new deadline was “not 100% firm”.

However, on Tuesday, the president posted on Truth Social that there would be no change or extensions granted to the Aug 1 date. The same day, Trump also announced a steep 50% tariff on copper imports.

Tuesday’s action follows Monday’s deep sell-off in which the Dow tumbled more than 400 points as Trump slapped 25% tariffs on South Korea and Japan. Trump hit at least 14 countries in total with new duties on Monday.

Investors are waiting for further clarity, with many expecting the ultimate tariff rates to not be as strict as what Trump has threatened.

“What we’ve seen since April has really been the markets getting past the idea that tariffs would have a particularly detrimental impact on growth, earnings, inflation etc.” said Bill Merz, head of capital markets research at US Bank Wealth Management. “Investor sentiment has shifted a lot in a very short period of time and become more optimistic, as we can see in equity market pricing and how we’re right around all time highs across market indices.”

On the upside, Nvidia advanced 1.1% to close at $160 Tuesday, getting closer to a $4 trillion market cap. Rival AMD posted a better gain of 2.2%, reinforcing the AI chip sector’s resilience. Meanwhile, traditional chip maker Intel jumped 7.2% to $23.59 on news of global layoffs and a price target upgrade by Citigroup.

Citi lifts Nvidia's price target on booming sovereign AI demand

Yahoo Finance, July 8, 2025

Citi (C) is doubling down on Nvidia (NVDA), driven by what it sees as a major expansion in demand for AI infrastructure, particularly from sovereign governments.

The firm raised its price target on the chipmaker to $190 per share, implying a roughly 15% upside from Nvidia's current trading levels. Citi analysts said they see Nvidia capturing a larger piece of an expanding total addressable market (TAM) for data center infrastructure. The upgrade comes as Nvidia continues its charge toward a $4 trillion market cap, with shares up 12% in the past month.

"We believe sovereign demand is already contributing up to billions of dollars in 2025" and should ramp up further in 2026, analysts Atif Malik and Papa Sylla wrote. Nvidia is involved in "essentially every sovereign deal," the note said, making the company central to the global race to build national AI infrastructure.

The firm raised its 2028 AI compute TAM estimate to $563 billion, up 13% from $500 billion, and networking TAM to $119 billion, up from $90 billion, expecting sharp sales increases for Nvidia.

Citi noted that at Nvidia's recent Generative AI conference, participants discussed a possible benchmark for AI infrastructure: one supercomputer or 10,000 GPUs per 100,000 employees, a ratio that could drive massive enterprise and government buildouts.

Nvidia, whose Blackwell GB200 chips power many of these AI clusters, is already seeing accelerating deployment, according to Citi. Concerns about potential bottlenecks in Nvidia's supply chain have also eased, with Citi reporting that rack buildouts are happening "at a rapid pace." As the company prepares for its next-gen GB300 chips, analysts expect a smooth transition, crediting lessons learned from earlier platform shifts.

Citi now expects Nvidia's data center revenue to grow 5% in FY 2027 and 11% in FY 2028. Networking sales are projected to surge by 12% and 27%, respectively. This represents a 20% attach rate, indicating a rising demand for high-performance systems that link large AI clusters. Gross margins are also forecast to continue expanding, normalizing in the mid-70% range by year-end.

Still, the bank flagged downside risks, including renewed export restrictions under a potential second Trump administration. Bloomberg recently reported that Malaysia and Thailand could face scrutiny for suspected shipments to China.

For now, though, the AI gold rush — especially from public sector buyers — shows no signs of slowing.

"Nvidia has line of sight to tens of gigawatts of sovereign and enterprise AI factory buildouts over the next few years," Malik and Sylla wrote.

My take: More and more analysts have become convinced that the AI compute market is not slowing down anytime soon, with Citi forecasting an increase in the Total Addressable Market (TAM) of AI compute to US$563 billion by 2028. Nvidia is doing annual revenue of about US$150bn from its data centre segment in 2025, and is capturing some 70%-80% of the AI compute market shares. Hence, Nvidia may potentially raise the revenue from its data centre segment to as much as US$450 billion in 2028, tripling its current revenue base.

The robust AI compute market and the booming sovereign AI bores well for YTL Power’s data centre developments in Malaysia and regional markets.

Malaysia pledges continued trade talks with US despite 25% tariff

Free Malaysia Today, July 8, 2025

PETALING JAYA: Malaysia remains committed to continued engagement with the US on a “balanced” and “mutually beneficial” trade agreement despite the announcement by US president Donald Trump today of a 25% tariff on Malaysian goods starting Aug 1.

In a statement, the investment, trade and industry ministry acknowledged the concerns raised by Trump over trade imbalances and market access, but said unilateral measures such as tariffs were disruptive to business operations, supply chains, and investments in both Malaysia and the US.

Adding that the government remained fully committed to protecting the interests of Malaysian businesses, workers, and consumers, the ministry said Putrajaya would take “all necessary steps” to mitigate the impact of the tariff, which is higher than the 24% originally imposed.

“The ministry will continue discussions with its US counterparts in good faith to address outstanding issues, clarify the scope and implications of the announced tariff, and identify avenues for the timely conclusion of ongoing negotiations,” it said.

“We strongly believe that through continued cooperation, both countries can find acceptable solutions that protect the interests of our economies and people while ensuring that bilateral trade and investment remain positive forces for sustainable economic development.”

The ministry also emphasised Malaysia’s long-standing economic ties with the US, noting that total trade between the two nations surged by nearly 30% in 2024 to RM324.9 billion (US$71.4 billion).

It said the US remained Malaysia’s second-largest trading partner and top export destination, making cooperation between the two economies vital for jobs, investment, and sustainable growth.

In a letter addressed to Prime Minister Anwar Ibrahim today, Trump said the 25% tariff on Malaysian goods was “far less” than what was needed to eliminate the country’s trade deficit with Malaysia.

Trump said any attempt to reroute goods through other countries to avoid higher tariffs would be penalised by the application of the higher rates.

He also warned that any decision by Malaysia to raise tariffs on US goods would result in an additional 25% tariff in response.

Malaysia had faced a 24% tariff on certain exports to the US unless both sides could reach an agreement before the end of the 90-day pause today.

My take: To me the 25% tariff announced on Malaysia imports to the US is within expectation, same for the 25% tariffs for Japan and South Korea. That is a typical tactic of Trump in trying to push the US trading partners into more concessions.

Trump wants Japan and South Korea to buy more Treasuries, and to open their markets for American cars to enter. I am not sure what Trump wants out of Malaysia.

But I believe eventually the tariff rates on most countries will fall to 10%-15%, which is the level of levies that American markets may adsorb to keep inflation at check.

YTL Power invests RM10b in AI, encourages local companies to leverage AI infrastructure

Bernama / Malay Mail, July 8, 2025

YTL Power International Bhd has invested about RM10 billion in artificial intelligence (AI) and AI infrastructure to date and encourages Malaysian companies to invest in AI and leverage the infrastructure.

YTL Power is a subsidiary of YTL Corporation Bhd.

Yeoh Keong Hann, executive director of YTL Power International Bhd said the company has invested in data centres, which he described as one of the world’s largest data centre parks, as well as in graphics processing units (GPUs) and a large language model.

“We have 200 megawatts operational, and we can go up to 600 megawatts. We have the world’s largest hyperscalers with us at our campus and a partnership with NVIDIA, which encompasses GPU chips.

“We also have the world’s fastest chips, the GB200 Blackwell chips, in Malaysia, in our data centres right now, and they will be operational very soon,” he told reporters in Rio de Janeiro, Brazil at the conclusion of Prime Minister Datuk Seri Anwar Ibrahim’s official visits to Italy, France and Brazil.

Yeoh said Anwar understands the impact of AI and AI technology for the country, and has said that he wants the company to explore further investments in the area.

“We will invest, and we are very grateful for the support of the government, and also to be part of this trip and this delegation, where we see a lot of global interest in our expertise and technology.

“Being with this trip also allowed us to meet with our counterparts in Paris, Rome and Rio de Janeiro, and really share insights. Hopefully, we can export this knowledge, expertise and technology globally,” he said.

Yeoh also said YTL Power is set to debut Malaysia’s very own large language model (LLM), ILMU 1.0 as well as Ryt Bank, Malaysia’s first AI-powered digital bank.

YTL Power International Bhd was part of the Malaysian delegation on the official visits, which began on July 1 and aimed at strengthening bilateral relations and boosting trade and economic cooperation.

Other Malaysian participants included Petroliam Nasional Bhd, Tenaga Nasional Bhd, Malayan Banking Bhd, FGV Holdings Bhd and Khazanah Nasional Bhd. — BERNAMA

My take: Yeoh confirmed that YTL Power already has the world’s fastest chips, Nvidia Blackwell GB200 GPUs installed at its AI data centre in Kulai and also has the world’s largest hyperscalers with YTLP at its data centre campus.

He said that YTL Power has about 200MW of data centres operational now, it refers to the 20MW AI data centre at JDC2, 48MW colo at JDC1, 80MW colo for an MNC/hyperscaler at JDC3 and 40MW colo for a US hyperscaler at JDC6, totalling 188MW secured so far. All these data centres will be up and running by Q1 2026. There is another 40MW optional data centre at JDC6, which the US hyperscaler has yet to give its greenlight to proceed.

The positive surprise from his interview with reporters at Rio is the potential expansion of YTL DC Park to as much as 600MW. The original plans for YTL DC Park at Kulai were for 500MW of data centres with an adjacent solar power farm of 500MW max. The land was acquired from Boustead Plantation for RM6.00 psf in 2022 and is larger than 1,700 acres. 500MW of solar power farm will take up land of about 1,500 acres as a rule of thumb, leaving some 200+ acres for data centre buildings.

If there is demand surge for more data centres, YTL Power could easily allocate more land for data centres, and less for solar power farm. If YTLP allocates 10% less land (~150 acres) for solar power farm, then it will have extra land for additional 300MW of data centres.

The share price of YTL Power staged a strong rebound yesterday to close at another months-high of RM4.16. The strong close has painted a bullish engulfing pattern in the technical chart, and has fully negated the gap-down dip on Monday.

The Yeoh interview with reporters in Rio has firmly given confidence to investors on the company’s prospects in AI data centre and AI-related developments such as the Malay Large Language Model (LLM), Ilmu 1.0 that YTL AI Labs has successfully developed in-house. I do not discount the possibility that Yeoh might have shared some other insights into YTL Power’s prospects and plans in 2H 2025 to foreign funds covering the BRICS Summit in Rio.

The strong buying of YTL Power shares on Tuesday looks more like foreign funds buying, rather than local institutional funds buying. The strong share price surge came amidst a generally weak market after the US announced a 25% tariff on Malaysian imports to the US. That was a positive surprise to me, and also a negative surprise to short sellers who might have thought that the stock would have no chance to break up resistance RM4.10 level in near term.

Net short positions on YTL Power rose by another 2.8m shares yesterday to 30.2m shares at close Tuesday. That shows to me that short sellers have not given up as yet and doubled down on their short bets on the counter. They were not convinced with the breakup of the share price from the resistance level of RM4.10. I see that they are playing a risky game here.

On the other hand, as posted in the official facebook page of HRH Crown Prince of Johor, the southern state is seeing the approval of the water supply project worth RM991 million by Pengurusan Aset Air Berhad (PAAB) which will provide additional capacity of 260 million litres per day (JLH). The water project was finalised through the Project Execution Letter (PEL) dated 7 July 2025. This project will strengthen the ability and maintenance of the water distribution system, especially in the JS-SEZ area.

Additionally, there are plans for raw water infrastructure construction for 2,000 JLH which will fulfill the requirements of the Johor state until the year 2060. This includes the Sg. Johor TAPS Project with a 200 JLH capacity, the Sg. Sedili Barrage Construction and TAPS Project with a capacity of 600 JLH and the Sg. Pontian Barrage Construction and TAPS Project with a capacity of 100 JLH that has been approved by the Federal Government under the 12th Malaysia Plan (RMK-12).

These are positive developments for Ranhill Utilities being the sole water supplier in Johor and YTL Power who is the parent company of Ranhill. Generally these new water projects are to ensure sufficient water supply to the booming data centres in Johor.

Based on CIMB estimates, Johor has reportedly received 52 data centre applications which could push water usage to 79 million litres a day by 2032. But this figure appears low compared to its another statement that says that data centres planned across several districts in Johor are expected to use 440 million litres per day of water. I need to check and verify these figures.

The construction costs of the RM991m water supply project will be borne by PAAB, while the construction work for the 2,000 JLH raw water infrastructure project will be carried out by YTL Construction. That will add over RM1 billion of construction order book to YTL Corp.