Technology & Telecommunications
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Summarising my current AI thesis – Part 2
Roger Montgomery
July 27, 2026
How to respond
Across my articles and media commentaries, I have emphasised that preparing for an artificial intelligence (AI) re-pricing is not about timing a top or shorting tech, but rather about protecting capital through discipline, factor balance, and liquidity.
There are five primary strategies to insulate an investment portfolio from an AI re-rating:
- Diversify away from equity index heavyweights
Broad, passive equity indices (such as the S&P 500 or Nasdaq) are historically concentrated. Passive flows into index funds mean a significant portion of an investor’s exposure is tied to six or seven AI-driven mega-caps.
Rebalance away from broad index funds that leave up to 60 per cent of equity risk tied to the AI trade. Investors might also consider locking in recent gains and diversifying equity exposure across unsung, non-AI themes. continue…
by Roger Montgomery Posted in Aura Group, Economics, Insightful Insights, Investing Education, Manufacturing, Market commentary, Market Valuation, Technology & Telecommunications.
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Summarising my current AI thesis – Part 1
Roger Montgomery
July 27, 2026
Last week, Google reported its first ever quarter of negative cash flow, surprising analysts who thought Q1 2027 would be when pressure on cash flows could seriously emerge, and causing the share price to plunge more than seven per cent.
With the clear exception of Tesla, most of the Mag 7 once deserved high earnings multiples because they were asset-light businesses with competitive advantages that didn’t require money to be defended. The artificial intelligence (AI) race has quickly eroded those moats and their characterisation as asset-light, because, over the last two years, they have had to spend hundreds of billions building data centres to remain competitive. continue…
by Roger Montgomery Posted in Economics, Insightful Insights, Manufacturing, Market commentary, Market Valuation, Technology & Telecommunications.
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Why cheaper AI doesn’t mean easy profits
Roger Montgomery
July 24, 2026
If you’ve been following the technology headlines, you might be confused by two seemingly contradictory statements. The first is that artificial intelligence (AI) is becoming dramatically cheaper to run, and the second is that tech companies are spending more money on AI compute than ever before.
How can we reconcile these statements, and what does the conclusion mean for companies like Pro Medicus (ASX: PME), Xero (ASX: XRO), NEXTDC (ASX: NXT), Megaport (ASX: MP1) and others?
If the unit price of AI is plummeting, shouldn’t the overall costs be going down? And if AI software is taking over the world, shouldn’t every startup building an AI application (App) be printing money?
To help explain the apparent dichotomy, you need to understand a 160-year-old economic concept called Jevons Paradox that’s currently being referenced everywhere and said to be driving the entire AI industry. continue…
by Roger Montgomery Posted in Companies, Energy / Resources, Insightful Insights, Manufacturing, Market commentary, Market Valuation, Technology & Telecommunications.
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Watching Hyperscaler debt
Roger Montgomery
July 17, 2026
Many years ago, I was asked by an AFR journalist whether I would revise my valuation of ABC Learning Centres, which was a tiny fraction of the traded price at the time, given the Singaporean Sovereign Wealth Fund (Temasek) had just invested in the company’s then-latest capital raise at a much higher market valuation.
Full of youthful confidence, I responded: “stupid people live in all different countries.”
A familiar pattern of fundraising and deployment was playing out at ABC Learning. It was one I had seen before and one which often resulted in pear-shaped returns for equity investors. That was certainly the case at ABC, which subsequently blew up spectacularly. continue…
by Roger Montgomery Posted in Economics, Global markets, Insightful Insights, Investing Education, Market commentary, Market Valuation, Popular, Technology & Telecommunications.
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Chipping in – Is exciting ‘safe’?
Roger Montgomery
July 14, 2026
Inside every smartphone, laptop, PC, smart speaker, smart TV, digital camera, USB flash drive and gaming console is a memory chip. And then there are industrial, medical and military applications. As an aside, Dramatic Random Access Memory (DRAM) and Not And (NAND) are the high-volume, commodity memory semiconductor components, working together in every device. DRAM requires power and manages your data, while NAND, which does not require power, stores your data. continue…
by Roger Montgomery Posted in Insightful Insights, Manufacturing, Market commentary, Technology & Telecommunications.
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WHITEPAPER
THE PROPERTY RUG PULL
Discover how proposed changes to negative gearing, Capital Gains Tax and holiday home tax rules could reshape property investing, and why investors may consider private credit as property returns become less certain and tax advantages diminish.
READ HERE -
The Big Short targets AI
Roger Montgomery
July 8, 2026
If you’ve been following our blogs and Montgomery Minutes about noted short seller Michael Burry, you’ll know he’s been making headlines this year for shorting the artificial intelligence (AI) bubble. Late last week, he reported he has again increased those short bets.
If you haven’t been following our posts on the subject, Michael Burry is the former chief of the now-closed hedge fund manager Scion Asset Management and was immortalised by Michael Lewis in his 2010 book The Big Short: Inside the Doomsday Machine, which reported on Burry’s large asymmetric bets against the 2008 U.S. housing bubble. continue…
by Roger Montgomery Posted in Economics, Editor's Pick, Insightful Insights, Market commentary, Market Valuation, Technology & Telecommunications.
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ABC Statewide Drive – What’s driving the tech sell-off?
Roger Montgomery
June 26, 2026
I joined Jess Maguire on ABC Statewide Drive to discuss the recent sell-off in technology shares and why rising interest rates, weakening cash flows and growing questions around artificial intelligence (AI) economics may be shifting investor sentiment. We explored how reported earnings across the major AI companies may be overstating the underlying picture, why relatively modest price-to-earnings (P/E) ratios do not necessarily rule out a market correction, and why diversification remains important in an increasingly uncertain environment.
Listen from 1:44:13: ABC Statewide Drive
by Roger Montgomery Posted in Economics, Market commentary, Technology & Telecommunications.
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MEDIA
Ausbiz – Is there an AI bubble?
Roger Montgomery
June 25, 2026
I joined Nadine Blayney on Ausbiz today to discuss why I remain cautious on the artificial intelligence (AI) investment theme, despite strong earnings from the major technology companies. While reported profits continue to rise, I argued that much of the spending on AI infrastructure is being treated as capital expenditure rather than an expense, making earnings appear stronger than underlying cash flows. I also suggested that today’s relatively modest price-to-earnings (P/E) ratios may not tell the full story, noting that markets can still suffer significant declines even from low valuations if earnings prove unsustainable. Ultimately, I believe the key risk is not that AI share prices are too high, but that investor expectations for future earnings may be too optimistic.
Tune in via Ausbiz here: The reason Roger reckons AI is a “bubble” continue…by Roger Montgomery Posted in Technology & Telecommunications, TV Appearances.
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MEDIA
Firstlinks – Have AI’s four horsemen arrived?
Roger Montgomery
June 19, 2026
In my latest Firstlinks article, I explore whether artificial intelligence (AI) is following the familiar path of past technology bubbles. As businesses shift from AI experimentation to demanding measurable returns, the question becomes whether the trillions spent on AI infrastructure will ultimately generate enough revenue to justify today’s lofty valuations.
You can read the article via Firstlinks here: Have AI’s four horseman arrived? continue…
by Roger Montgomery Posted in Economics, In the Press, Insightful Insights, Market commentary, Technology & Telecommunications.
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Buffett vs. Musk
Roger Montgomery
June 18, 2026
“You cannot be afraid of new technologies. I think that this tenet passed Warren Buffett by. As he is the greatest investor of all time, I think it’s important to recognise that if he were not afraid of product cycles and obsolescence, he would have made much more these last few years than he did. Now, I know we shouldn’t criticise someone of his unbelievable prowess, but we must also recognise that it was wrong not to include technology stocks in the portfolio…[they] are creating too much wealth to ignore.”
With Musk now the world’s first recorded trillionaire after SpaceX’s float last Friday, you might be thinking the above quote has merit, especially as 60 per cent of Berkshire Hathaway’s portfolio is sitting in cash.
But the above quote, by Jim Cramer, was made in January 2000, just three months before the Dot.Com crash wiped 76.81 per cent from the tech-heavy NASDAQ Composite index and investors saw an estimated US$5 trillion in paper wealth evaporate between 2000 and 2002. continue…
by Roger Montgomery Posted in Economics, Editor's Pick, Global markets, Market commentary, Technology & Telecommunications.
