Goldman Sachs: Google plans to invest 15 billion dollars to build data centers in Malaysia; focus on orders for Japanese equipment makers

What changes does Google’s investment plan bring?

Google announced plans to invest 15 billion dollars in data centers in Malaysia from 2027 to 2028. Goldman Sachs considers this a large-scale investment concentrated in a relatively short period.
Goldman Sachs observes that construction of generative AI data centers in Asia is booming; by contrast, some projects in the United States face issues such as opposition campaigns.

Mitsubishi Electric previously said it had received an inquiry about participating in the construction of a major data-center project in Asia. Goldman Sachs believes this project may be the Malaysia project announced by Google.
Fuji Electric has secured orders for power equipment for data centers in Asia, and Fujikura has also secured orders for optical wiring products. Goldman Sachs believes that securing more projects would be a positive development for both companies.
Goldman Sachs maintains Buy ratings on Mitsubishi Electric and Fujikura and a Sell rating on Fuji Electric. For Fuji Electric, early adoption by data-center customers of products such as power-distribution equipment, uninterruptible power supplies and control panels is one of the rating risks listed by Goldman Sachs.

Goldman Sachs believes that as data-center construction progresses, the power grid will need upgrades to handle the facilities’ electricity demand. Daihen has an overseas power-equipment plant in Thailand, while Hitachi operates a grid business globally, so both companies may benefit.
The conversion of demand into sales still depends on project progress: Goldman Sachs notes that demand for Daihen’s power equipment may take longer to convert into sales because of project delays; Hitachi’s transmission and distribution projects also face the risk of delays and a sharp increase in input costs.
Goldman Sachs lists future order trends at each company as an area of focus. For Fujikura, delayed benefits from investment by hyperscale cloud-service providers and competitors in ultra-high-density optical cables catching up are among the risks identified by the firm.