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How much!?!?
Roger Montgomery
August 17, 2026
How much do the artificial intelligence (AI) hyperscalers’ businesses need to make from selling their AI tools in order to generate a decent return?
The debate surrounding the Return on Invested Capital (ROIC) for big tech’s massive AI infrastructure expansion revolves around a core question: How much end-user revenue is required to cover hardware depreciation, energy costs, and capital costs?
With hyperscaler capital expenditure (capex) on track to surpass US$600 billion- $800 billion annually, several prominent analysts, venture capital firms, and investment banks have published frameworks and scenarios to quantify the revenue needed for a reasonable return.
Here are a handful. You can decide whether the targets are likely to be met. Continue…
by Roger Montgomery Posted in Economics, Investing Education, Manufacturing, Market commentary, Market Valuation, Technology & Telecommunications.
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The AI funding window is closing: slowing revenue, IPO fails, and a bankrupt OpenAI
Roger Montgomery
October 21, 2026
For two years, Silicon Valley and global equity markets agreed that artificial intelligence (AI) is an uncapped frontier where aggressive capital deployment and unchecked spending would automatically yield exponential returns. Or, perhaps, equity markets believed the spin coming out of Silicon Valley.
Whichever scenario is true, reported operating results over the past week have confirmed the shift in sentiment toward AI.
Slowing revenue, public market pullbacks, and fluid enterprise strategies suggest the market’s appetite for unconstrained AI spending is finally hitting a ceiling. Investors have well and truly moved past the honeymoon phase and are demanding proof of a sustainable economic model. Continue…
by Roger Montgomery Posted in Economics, Editor's Pick, Insightful Insights, Manufacturing, Market commentary, Market Valuation, Technology & Telecommunications.
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Put it on the tab
Roger Montgomery
September 17, 2026
In recent months, the chart shown in Figure 1., has been doing the rounds, inspiring fear among some observers that a stock market crash is imminent. Continue…
by Roger Montgomery Posted in Economics, Editor's Pick, Global markets, Insightful Insights, Investing Education, Market commentary, Market Valuation.
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Many major economies under stress from relatively high inflation AND unemployment
David Buckland
September 29, 2026
After cutting their cash rates in the latter part of 2024 and 2025, the Central Banks of Australia, the U.S., Europe and New Zealand have recently reversed tack. This is coming at a tricky time for many economies with inflationary expectations and cost of living issues putting additional pressure on consumers, and this is often accompanied by relatively high unemployment in the UK (5.0 per cent), Europe (6.4 per cent), Canada (6.4 per cent) and New Zealand (5.6 per cent). Continue…
by David Buckland Posted in Economics, Editor's Pick, Insightful Insights, Market commentary, Popular.
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Another look at the AI bubble
Roger Montgomery
August 18, 2026
While the debate continues over whether the artificial intelligence (AI) thematic is a bubble, the S&P 500 and the Nasdaq continue to climb a wall of worry. You’d think this would cause at least some of the AI sceptics to throw in the towel, but if anything, it has reinforced their resolve and reinforced their scepticism.
One of the most vocal is English author and tech columnist Ed Zitron.
In a recent interview with Adam Taggart, Zitron dismantled the core promises of the AI boom, suggesting current Large Language Models (LLMs) are an unsustainable, highly subsidised circular economy that fails to solve basic business problems. He also highlights immediate balance sheet pressures, and extreme market concentration. Continue…
by Roger Montgomery Posted in Manufacturing, Market commentary, Technology & Telecommunications.
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The Bond tantrum returns – Rates, liquidity, and the Battle for the Long End
Roger Montgomery
September 21, 2026
In financial markets, it’s said history doesn’t repeat, but it frequently rhymes. The recent bond market moves seem to reflect a market rhyming with the 2023 bond tantrum, threatening to disrupt everything from home mortgages and corporate credit to government financing and equity valuations.
U.S. Treasury yields have broken out of what has widely been described as a multi-year range, pushing the benchmark U.S.10-year yield toward 5.00 per cent. Continue…
by Roger Montgomery Posted in Economics, Market commentary.
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10 lessons from the FY26 reporting season
Roger Montgomery
September 3, 2026
The Financial Year 2026 (FY26) reporting season has concluded with corporate Australia in considerably better shape than many had feared.
Before getting too excited, however, it’s worth noting corporate Australia may not be in as good shape as the headline numbers suggest.
Aggregate profits rose by around 11.6 per cent. Excluding mining and energy, however, the increase was just 5.3 per cent. Only 36 per cent of companies beat earnings expectations, below the historical average of about 40 per cent. Meanwhile, analysts have been cutting FY27 forecasts. Continue…
by Roger Montgomery Posted in Companies, Economics, Editor's Pick, Feature Article, Insightful Insights, Investing Education, Market commentary, Market Valuation, Small Caps, Stocks We Like.
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ARB’s FY26 – A look under the hood
Roger Montgomery
August 31, 2026
ARB Corporation (ASX: ARB) is Australia’s leading designer, manufacturer, and distributor of premium 4×4 vehicle accessories. Known worldwide for its flagship bull bars, suspension systems, roof racks, and camping gear, the company operates an extensive retail, wholesale, and export network serving off-road enthusiasts, commercial fleets, and Original Equipment Manufacturers (OEMs). Continue…
by Roger Montgomery Posted in Companies, Consumer discretionary, Manufacturing, Market commentary, Market Valuation.
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Reporting season says the Australian consumer is cautious, not capitulating
Roger Montgomery
August 21, 2026
There’s a consistent view of the consumer emerging from Australia’s Financial year 2026 (FY26) retail reporting season.
Households haven’t stopped spending, but they’ve become more selective, more value-conscious and increasingly willing to postpone discretionary purchases or wait for promotions and sales.
The pressure is most evident in big-ticket categories like furniture, appliances, and homewares. Nick Scali (ASX:NCK) noted a significant decline in store traffic late in the year; JB Hi-Fi (ASX:JBH) mentioned that customers are focusing their purchases around major sales; and Temple & Webster (ASX:TPW) said that while browsing continues, customers are delaying their buying decisions. Continue…
by Roger Montgomery Posted in Companies, Consumer discretionary, Economics, Editor's Pick, Manufacturing, Market commentary, Market Valuation.
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The great Treasury swap (and why it matters)
Roger Montgomery
August 28, 2026
If you follow financial news, like I do, you might have recently heard market commentator Trevor Hall summarise Treasury Secretary Scott Bessent’s latest move in a single eye-opener:
“He’s buying back bonds with 1 per cent interest rates at 50 cents on the dollar and replacing them with short-term debt that currently yields 3 and ¾ per cent.”
It sounds like a paradox. Why would the U.S. government buy back debt that costs them almost nothing (1 per cent interest rates) and swap it for debt that costs almost four times as much (3.75 per cent)? Continue…
by Roger Montgomery Posted in Economics, Global markets, Insightful Insights, Investing Education, Market commentary.
What do U.S. rising interest rates mean for Australia? Find out here.
