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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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Treasurer Jim Chalmers stepped up to the dispatch box in May 2026 to announce a sweeping overhaul of negative gearing and capital gains tax (CGT).

By stripping negative gearing from established properties purchased after May 12 and swapping the 50 per cent CGT discount for an inflation-indexed method and a 30 per cent minimum tax floor from July 2027, the Albanese Labor Government claimed to be setting out to achieve a progressive holy grail. Putting aside that this was nothing more than another tax grab to plug a budget hole born of profligate spending, fiscal waste and mismanagement, they claimed to be tilting the playing field away from wealthy property hoarders and toward aspiring young first-home buyers.

Two months later, the early data is in. And while the reforms have successfully detonated a bomb under housing market activity, the fallout has been completely twisted. Instead of ushering young Australians into their dream homes, Labor’s housing policy has locked them out faster than ever. Continue…

by Roger Montgomery Posted in Economics, Market commentary.

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When I wrote Value.able in 2010, ‘Quality’ as an investing factor was gospel, a foundational truth: buying fundamentally superior businesses at reasonable prices and holding them over the long run was the surest path to wealth creation.

Individuals like Warren Buffett, Charlie Munger, Mohnish Pabrai, Seth Klarman, Howard Marks and Terry Smith proved, over decades, that Quality rules. Superior Return on Capital Employed (ROCE) or Return on Equity (ROE), high gross margins, and consistent Free Cash Flow (FCF) conversion inevitably compounded a company’s equity, and ultimately produced outsized returns for investors in those businesses. Continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Insightful Insights, Investing Education, Market commentary, Market Valuation.

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If you want to know where the stock market might be headed, you have to look at the economic gravity being exerted by the bond market. Right now, U.S. stocks and bonds appear to be on a dangerous collision course.

Think of it in terms of a feedback loop: soaring stock prices have made U.S. households feel incredibly wealthy – with equity holdings sitting at a record 250 per cent of disposable income – which keeps consumer spending hot and inflation sticky. At the same time, tech giants are pouring billions into data centres, further heating up the economy.

As the new U.S. Federal Reserve Bank Chair, Kevin Warsh, just hinted, inflation won’t come down. So bond yields won’t drop until the stock market takes a meaningful breather to cool things off. Continue…

by Roger Montgomery Posted in Economics, Global markets, Market commentary.

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Since January 1999, Macquarie Bank’s shares have risen almost 1,400 per cent, and that excludes the returns from reinvesting dividends. That’s just capital gains alone.  Assuming the Federal Labor Party is voted out, and their capital gains tax disincentives are unwound, there could be another Macquarie-Bank-like 1999 opportunity. The opportunity to buy a mini Macquarie on the ground floor might be Magellan Financial Group (ASX: MFG).

On 11 June 2026, the Australian Competition and Consumer Comission (ACCC) decided to approve Magellan Financial Group Ltd’s (MFG) proposed acquisition of the remaining shares in Barrenjoey Capital Partners Group Holdings Pty Limited (Barrenjoey) that it does not already own, in return for equity in MFG (the Acquisition).

Magellan Financial Group’s acquisition of the remaining shares in investment bank Barrenjoey was approved by shareholders in April 2026. Completion is expected in early July 2026.

Here are the key terms and structural details of the merger: Continue…

by Roger Montgomery Posted in Companies, Editor's Pick, Financial Services.

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The Australian Competition and Consumer Commission (ACCC) needs to follow California’s lead and get on this! 

I want to tell you about a product called Kalibrate Fuel Pricing. Kalibrate, the company that provides artificial intelligence (AI) driven fuel pricing and market analytics software, is owned by the private equity firm Hanover Bidco.

Kalibrate Fuel Pricing requests petrol station owners to provide sensitive, non-public data, including historical gas sale costs, volumes, forecasted costs, and margins. Using this private data alongside publicly available information, it offers pricing recommendations for petrol. Kalibrate describes this approach as “competitor-led fuel pricing decisions” and claims to provide “complete visibility on your competitors.”

That all sounds reasonable when thinking about an individual station using the service. Continue…

by Roger Montgomery Posted in Companies, Editor's Pick, Energy / Resources, Market commentary.

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When it comes to IPOs, you generally don’t want to be a member of any club that will have you. But, Australian retail investors are being given access.

Whether it’s the timing, the size, or something more sinister, the SpaceX IPO is poised to be one of the more polarising stockmarket milestones in recent times.

This article was first published in The Australian on 09 June 2026.
Continue…

by Roger Montgomery Posted in Companies, In the Press.

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Artificial intelligence (AI) has become the market’s biggest investment theme, with strong earnings and seemingly reasonable valuations convincing many investors the rally still has further to run.

But beneath the surface, several warning signs suggest the picture may not be as strong as it appears.

Big claims, bigger questions

Elon Musk says SpaceX’s Total Addressable Market (TAM) in Enterprise AI is US$26.5 trillion. Outside estimates suggest $US50-$300 billion. This leaves the ‘buyers’ and the ‘sellers’ with some important questions. Continue…

by Roger Montgomery Posted in Companies, Market Valuation.

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I joined Kirsten Aiken on ABC The Business to discuss the challenges facing Australia’s retail sector. With higher interest rates slowing the economy and uncertainty around proposed tax changes weighing on consumer confidence, spending has softened across age groups. We explored the pressures facing traditional retailers, the accelerating shift to online shopping, the impact of global competitors, and why department stores such as Myer and David Jones continue to face long-term challenges as consumer habits evolve.

Watch here: Challenges grow for the retail sector, Glue the latest to close. Continue…

by Roger Montgomery Posted in Companies, Consumer discretionary, Economics, Editor's Pick, Insightful Insights, Market commentary.

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I recently joined ABC Newcastle Mornings with Kylie Morris to discuss why households may benefit from reviewing their spending habits, including a simple exercise of separating expenses into “wants” and “needs” to identify potential savings and build a financial buffer.

We also explored how interest rates can act like gravity on asset prices, with higher rates reducing the present value of future cash flows – potentially weighing on shares and other investments.

Finally, we touched on the implications of the artificial intelligence (AI) boom for investors and superannuation (with specific reference to the recent SpaceX IPO), including concerns around supply chain fragility, resource consumption and the growing integration of AI into critical systems.

Tune in from 37:30 here: ABC Newcastle Mornings Continue…

by Roger Montgomery Posted in Consumer discretionary, Economics, Investing Education, Market commentary, Radio.

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