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I joined Juliette Saly on Ausbiz to discuss the next phase of the artificial intelligence (AI) investment cycle and the growing divergence between the companies building AI infrastructure and the hyperscalers funding it. We explored the risks posed by mounting AI capital expenditure (capex), weakening cash flows, the emergence of lower-cost Chinese AI models and what could happen if hyperscalers begin slowing investment. We also discussed why investors may benefit from looking beyond momentum-driven technology stocks towards high-quality, value-oriented businesses and other defensive assets.

Watch the full episode on Ausbiz here: Who really wins from the AI boom? continue…

by Roger Montgomery Posted in Economics, Global markets, Investing Education, Manufacturing, Market commentary, Market Valuation, Technology & Telecommunications, TV Appearances.

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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:

1. 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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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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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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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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In this video insight, I explain why I believe investors should look beyond the strong earnings and seemingly reasonable valuations driving enthusiasm for artificial intelligence (AI). I examine questions surrounding optimistic market assumptions, insider selling incentives, the economics of AI, rising debt levels, weakening cash flows, and whether reported earnings are overstating the sector’s underlying profitability. I also argue that low price-to-earnings (P/E) ratios do not necessarily protect markets from significant corrections and suggest the real bubble may lie in AI earnings expectations rather than share prices. continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Global markets, Investing Education, Manufacturing, Market commentary, Video Insights.

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The rush to Electric Vehicle (EV) ‘adoption’ surged globally following the outbreak of the war in Iran and the subsequent spike in fuel prices. In Europe, new EV registrations rose by roughly 34 per cent year-on-year (YoY) across 17 major markets, while some automakers like Renault reported a 50 per cent jump in their EV order books. 

Here in Australia, new EV uptake jumped nearly 50 per cent in the first month of the conflict, nearly doubling YoY sales to account for 14.6 per cent of all new car sales.

That these buyers weren’t buying before the war began might say something about motivations: less about being environmentally friendly and more about saving the hip pocket. continue…

by Roger Montgomery Posted in Manufacturing, Market commentary.

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Scott Galloway is an American academic, author, podcast host, and serial entrepreneur. He’s best known as a Clinical Professor of Marketing at the New York University Stern School of Business and a prominent commentator on big tech, modern economics, and social trends.

Galloway has recently and publicly joined the ranks of stock market bears, predicting we’re on the precipice of a US$10 trillion wipeout while immediately noting he, “gets this wrong all the time [so] this is not financial advice.” continue…

by Roger Montgomery Posted in Energy / Resources, Manufacturing, Market commentary, Market Valuation.

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There’s a thesis many investors are now positioning for: The artificial intelligence (AI) infrastructure buildout being led by the hyperscalers can’t proceed without copper, silver, and other critical metals, such as scandium. Their conclusion is that commodity prices will rocket higher if the the A.I. revolution continues.

Current forecasts suggest the combined capital expenditure of Amazon, Google, Meta, and Microsoft will reach US$715 billion in 2026, up 98 per cent on 2025 and nearly three times their combined capital expenditure (capex) in 2024. continue…

by Roger Montgomery Posted in Energy / Resources, Manufacturing, Market commentary, Technology & Telecommunications.

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Trump recently boasted on Truth Social of the US$45 billion he made for the U.S. by investing in Intel. continue…

by Roger Montgomery Posted in Manufacturing, Market commentary, Technology & Telecommunications.

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