Quick Summary Nvidia posted a 75.2% adjusted gross margin , among the highest in Big Tech AI hyperscalers plan US$650B capex in 2026 , much flowing to Nvidia Rivals like AMD, Alphabet and Amazon are gaining traction Long-term margin sustainability remains the key investor question Margins Steal the Show While investors already expected strong demand, NVIDIA Corp surprised with something even more impressive: Adjusted gross margin of 75.2% , the highest since late 2024 — and management expects similar levels next quarter. For a nearly US$5 trillion company , that margin signals extraordinary pricing power in AI hardware. AI Spending Wave Still Intact AI hyperscalers are forecasting ~US$650 billion in capex for 2026 , up roughly 60% from 2025. Nvidia remains the primary beneficiary as demand for data centre GPUs continues to surge. But maintaining 75% margins depends on two big factors: 1️⃣ Supply Constraints Rising memory costs remain a ris...
Quick Summary
FY2025 core net profit up 11% to RM633m
Same-store sales growth (SSSG) still weak at -2% for full year
Analysts downgrade on store saturation and cannibalisation risks
YTD share price up 22%, limiting upside
Strong Earnings, But Growth Questions Emerge
Shares of Mr DIY Group (M) Bhd are facing more cautious analyst views, even after delivering solid FY2025 earnings.
FY2025 highlights:
Core net profit: RM633 million (+11% YoY)
Gross margin expansion driven by:
Lower procurement costs
Stronger ringgit
However:
Full-year SSSG remained negative at -2%
4QFY2025 SSSG turned positive at +1.4%, helped by festive demand and promotions
Key issue: Organic growth remains soft despite margin strength.
Why Analysts Are Turning Cautious
1️⃣ Store Saturation Risk
The group plans to open 155 new stores in FY2026, raising concerns of:
Sales cannibalisation
Slower sales per square foot
Market nearing maturity
2️⃣ Valuation No Longer Cheap
Share price: RM1.87
Market cap: RM17.6 billion
+22% YTD rally
Maybank Investment Bank:
Downgraded to ‘Hold’
Target price raised to RM1.97
Cut FY2026–FY2027 earnings by 3%–12%
Kenanga Research:
Downgraded to ‘Market Perform’
Target price: RM1.95
Says fundamentals already priced in
Upside now seen as limited (~12%)
Guidance for FY2026
Management targets:
Gross margin: 46%–48%
Return on equity: mid-30% range
Continued aggressive store rollout
While operational efficiency remains strong, analysts warn that future growth may be volume-driven rather than productivity-driven.
Bottom Line
Mr DIY delivered solid profit growth, but momentum may slow.
Margins are strong and management remains expansion-focused, yet negative SSSG and rising store density suggest the business may be approaching saturation in key markets.
The next phase of growth will depend less on expansion — and more on improving store productivity and sustaining consumer demand.
Key Takeaways
Earnings solid, margins improving
Same-store sales still fragile
155 new stores planned
Valuation stretched after strong rally
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