Market Valuation

I know everyone is focused on Iran and oil at the moment, but when the conflict eventually ends, investors will cheer…and return to the themes that previously dominated markets.

And that theme is artificial intelligence (AI).

At Montgomery, we have always preached that, in the long run, share prices follow a simple trajectory: the present value of future cash flows or the ‘intrinsic value’ of a stock. We have long advocated investors look for “great” businesses with high returns on incremental invested capital and durable competitive advantages.

From time to time, however, the market enters a period of “narrative-driven” exuberance where the arithmetic is ignored in favour of a grand story. A theme. continue…

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

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I joined Andrew Geoghegan on Ausbiz to discuss why geopolitical shocks often coincide with resilient equity markets. History shows that while wars and major conflicts can trigger sharp initial sell-offs, markets have often recovered quickly and, in some cases, delivered strong returns during those periods. During World War I, for example, U.S. equities initially fell by around 30 per cent before going on to generate average annual gains of close to 7 per cent between 1915 and 1918, including a particularly strong rebound in 1915. World War II also aligned with solid Dow Jones returns, depending on the start and end dates used. And according to data from LPL Financial on 22 major non-financial shocks since Pearl Harbor, markets have typically fallen by around 5 per cent before recovering fully within about six weeks. continue…

by Roger Montgomery Posted in Global markets, Insightful Insights, Market commentary, Market Valuation, TV Appearances.

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Prior to the conflict, investors were debating AI’s immediate and long-term impact. While 2025 was about the rise of the AI “picks and shovels” – enablers like Nvidia – 2026 witnessed the emergence of agentic AI, and the narrative quickly became about the fall of the middlemen – the traditional software companies that built epochal and capital-light business on a per-seat revenue model.

This article was first published in The Australian on 25 March 2026. continue…

by Roger Montgomery Posted in Economics, Global markets, In the Press, Investing Education, Market commentary, Market Valuation, Technology & Telecommunications.

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I joined Philip Clark on ABC Nightlife to discuss the shift toward a more volatile market environment in 2026. With inflation likely rising again, growth slowing and oil prices climbing, the key conditions that supported recent equity gains are fading. We also explored potential war scenarios involving Iran and how they could impact markets, inflation and interest rates.

Given this backdrop, I highlighted the need to rethink portfolio construction, with private credit emerging as a potential alternative offering attractive income with lower volatility. We also touched on rising fuel costs, price pressures on consumers, and broader structural challenges in Australia’s economy. continue…

by Roger Montgomery Posted in Aura Group, Global markets, Insightful Insights, Investing Education, Market commentary, Market Valuation, Radio.

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April 9, last year, Donald Trump postponed his Liberation Day tariffs, fuelling a stock market rally led by artificial intelligence (AI) optimism. That optimism turned to fear this year as joy towards AI’s productivity enhancements morphed into panic about how many businesses it would destroy.

That panic reached an even higher level of urgency last week, when James van Geelen, a thematic investor and former entrepreneur who founded a healthcare company before moving into investment research on Substack, hypothesised that AI would lay waste to the entire global consumer economy, leaving generations of white-collar workers redundant. continue…

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

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It’s been a chaotic morning for JB Hi-Fi (JBH) investors. If you’ve been watching the screens, you might have developed a mild case of whiplash. JB Hi-Fi shares opened over 5 per cent higher at around $80, fell to $72 (down 4 per cent), and have since clawed back above $80, reflecting a classic case of a solid half-year result clashing with a cautious outlook for the rest of 2026.

A solid 1H26 result

On the surface, JB Hi-Fi remains a poster child of execution. Sales and Net Profit After Tax (NPAT) were both up over 7 per cent year-on-year (YoY), largely meeting or exceeding consensus expectations. continue…

by Roger Montgomery Posted in Companies, Market commentary, Market Valuation.

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Following the release of its Half-Year 2026 (HY26) results, the Australian Stock Exchange (ASX) finds itself at a crossroads, balancing record-breaking volumes with significant regulatory and management hurdles.

Volumes and new models

Despite the noise, the ASX’s core business is thriving. The HY26 results showed a significant growth beat, driven primarily by cash volumes, clearing, and bonds, with daily trading volumes having surged above $8 billion. continue…

by Roger Montgomery Posted in Market commentary, Market Valuation, Stocks We Like.

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The artificial intelligence (AI) industry is currently grappling with what some experts call a ‘trillion-dollar math problem’. The numbers might not stack up because customers might simply lack the funds to spend on AI tools to allow hyperscalers to achieve a decent return on their AI infrastructure investment.

With hyperscalers projected to spend US$3 trillion on AI infrastructure by 2029, the market faces a substantial revenue gap. To justify current valuations and maintain reasonable margins, AI services would need to generate revenue equivalent to 10 per cent of the entire U.S. Gross Domestic Product (GDP) of US$30 trillion. This represents a massive commercial risk; if expectations of an adequate return on investment in two or three years evaporate, this historic capital expenditure risks producing a multi-trillion-dollar overcapacity. continue…

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

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Commonwealth Bank (ASX: CBA), under the guidance of CEO Matt Comyn, has once again proven why it’s considered the best Australian bank. Despite a muddy economic backdrop and fierce competition in the mortgage market, the bank’s half-year FY26 (1H26) results beat analyst expectations (again).

While the headline numbers were strong and will dominate today’s commentary, a more interesting story lies in the shifting dynamics of Australia’s largest lender. continue…

by Roger Montgomery Posted in Companies, Financial Services, Market commentary, Market Valuation, Stocks We Like.

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On December 18, in a blog entitled Time Magazine Cover Curse, I wrote, “…Gracing the cover of the [TIME] mag isn’t a coronation but a harbinger of doom, because the moment a public figure has permeated the public discourse sufficiently to land the cover, the trajectory inevitably reverses.”

Politicians have suffered landslide defeats after being featured on the cover, as have business tycoons whose stocks plummet, and celebrities whose reputations are assassinated under sudden, intense scrutiny. continue…

by Roger Montgomery Posted in Companies, Economics, Investing Education, Market Valuation.

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