Category: Stock Market

Looking to add a few buy-rated S&P/ASX 200 Index (ASX: XJO) shares to your investment portfolio for the holidays?

You’ve come to the right place!

Below, we look at two stocks analysts expect to be well-placed to outperform in the year ahead (courtesy of The Bull).

A compelling buy-the-dip opportunity

The first ASX 200 share tipped as a buy is SGH Ltd (ASX: SGH), also known as Seven Group Holdings.

SGH shares are up 0.4% in early afternoon trade today, changing hands for $46.26. That sees the share price up a modest 1.6% over 12 months. SGH stock also trades on a fully franked 1.3% trailing dividend yield.

And with the share price down 11% since 11 August, DP Wealth Advisory’s Andrew Wielandt believes SGH shares are now trading for a bargain.

“This diversified company focuses on industrial services and energy,” Wielandt said.

He noted:

Businesses include WesTrac, Coates and Boral, along with significant exposures to Beach Energy and Seven West Media. WesTrac is the sole authorised Caterpillar dealer in Western Australia, New South Wales and the Australian Capital Territory.

Commenting on the growth outlook for the ASX 200 stock, Wielandt said, “We expect the Caterpillar dealerships to benefit from strong expected demand in the resources sector. SGH should also benefit from equipment hire.”

And with the SGH share price still well down since August, now could be an opportune time to wade in and buy the dip.

Wielandt concluded:

Fiscal year 2026 guidance fell short of market expectations. Share price weakness provides a buying opportunity. The shares have fallen from $51.86 on August 11, the day prior to reporting full year 2025 results, to trade at $44.72 on December 11.

Which brings us to…

ASX 200 share offers attractive re-rating potential

The second stock you may wish to add to your Christmas list is Ansell Limited (ASX: ANN).

Shares in the health and safety products company are up 0.2% at the time of writing, trading for $36.06 each. Ansell shares have increased by 9.5% over the past 12 months. The ASX 200 share also trades on a 2.1% unfranked trailing dividend yield.

Looking ahead, EnviroInvest’s Elio D’Amato sees further strong growth potential.

“Ansell makes personal protection equipment for healthcare and industrial workplaces,” said D’Amato, who has a buy recommendation on Ansell shares.

According to D’Amato:

Organic sales growth, efficiency gains and favourable foreign exchange movements supported upgraded earnings per share guidance to between $US1.37 and $US1.49 in fiscal year 2026.

The balance sheet remains sound, and margin momentum is improving across its healthcare and industrial divisions.

And the ASX 200 share should appeal to ESG investors as well.

D’Amato noted:

Environmentally, ANN benefits from tightening global sustainability standards in personal protective equipment procurement and ongoing investment in cleaner manufacturing processes. ANN intends to be net zero, including scope 3 emissions, by 2045.

Connecting the dots, D’Amato concluded, “ANN offers defensive earnings, improving cash flow prospects and attractive re-rating potential.”

The post Analysts name 2 top ASX 200 shares to buy today appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Seek Ltd (ASX: SEK) shares are trading in the red again in Tuesday morning trade. At the time of writing, the job listing company‘s shares are down 1.51% to $22.50 a piece. 

The latest tumble means the shares have now crashed 22.9% from their 3.5-year peak of $29.18 in late September. Seek shares are now trading 5.52% below their value at this time last year.

There hasn’t been any price-sensitive news out of the company since its 2025 annual general meeting (AGM) results in mid-November. 

But analysts at Macquarie Group Ltd (ASX: MQG) have updated investors on their outlook for Seek shares following the latest data on Australian job ad volumes for November.

In the investor note, Macquarie confirmed its outperform rating and $32.50 target price on Seek shares. The broker’s stance on the stock is unchanged from August.

At the time of writing, this implies a potential 44.5% upside ahead for investors over the next 12 months.

Seek shares remain a top pick, despite the recent sell-off

Macquarie stated that the Seek employment report for November 2025 showed that Australian job ad volumes decreased by 2% year-over-year and 1% sequentially. On a 3- and 6-month rolling basis, job ad volumes are 2% and 3% lower, respectively.

Applications per ad in October were flat sequentially at 221. But this was 97 more applications (or 78% higher) compared to the 10-year average. 

“The report generally corresponds to Seek’s paid ad volumes, but with adjustments to 1) the inclusion of free company ads in the report and 2) weighting of Australian / New Zealand volumes (MQe = 90% / 10% skew),” the broker said in its note.

The broker commented that monthly declines in Australia continue to narrow. Assuming these trends continue through FY26, as well as continued New Zealand strength and outperformance of paid volumes, the broker said it expects Seeks’ 1H26 paid volume decline to be around 2%, and guidance for flat FY26 volumes will be achievable.

Macquarie analysts added that potential interest rate hikes in 2026 could create headwinds for job volumes. 

“Seek remains our top classifieds pick; with our view that FY26 guidance may be narrowed to the high end at the 1H26 result, supported by yield but with possibly some caution on volumes given near-term rate hikes,” Macquarie said.

“With that said, classifieds globally have underperformed, with significant debates on the impacts of AI, and whether there will be significant structural changes within the industries.”

The post Seek shares tipped to storm 45% higher next year: Here’s why appeared first on The Motley Fool Australia.

More reading

• Is there opportunity in 2026 outside the big four bank shares?
• Up 813% in 5 years, why Macquarie expects this surging ASX 200 stock to keep outperforming in 2026
• Why Flight Centre shares could return 22% in just one year
• Why did Macquarie just downgrade CSL shares?
• 3 excellent Australian dividend shares to buy with $1,000

Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Australian chemicals and explosives giant Orica Ltd (ASX: ORI) has started the year with “strong momentum”, while at least one broker is tipping its shares will hit a new high-water mark on continued good results.

Orica held its annual general meeting on Tuesday, with managing director Sanjeev Gandhi bullish on the company’s prospects for the year ahead.

As he told the meeting:

Building on the strong performance in 2025, we have started the 2026 financial year with strong momentum. Demand for blasting technology, specialty mining chemicals and digital solutions remains strong, and our disciplined approach to execution and capital allocation positions us to navigate inflationary pressures, energy costs and geopolitical uncertainty. Looking forward, Orica is well-positioned to continue to deliver profitable growth across all three business segments and create enduring value for our customers and shareholders.

Balance sheet management

On capital management, Mr Gandhi said that in 2025 the company had, for the first time in a decade, conducted a share buyback which was “substantially completed … and this program has been increased by up to an additional $100 million, demonstrating our ongoing commitment to delivering value for our shareholders”.

Mr Gandhi said the company’s “disciplined approach” to capital management and prudent balance sheet was “structured to withstand volatility in the external environment”.

We continue to deliver our strategy in dynamic operating environments, where shifting market conditions and evolving societal expectations create new opportunities for innovation, adaptation and global growth— strengthening Orica’s position and supporting long-term value creation for our customers and shareholders.

Share price gains on the cards

The analysts at RBC Capital markets said in a note to clients on Tuesday morning that company’s musings at the AGM appeared to be “slightly more positive than the commentary provided at the FY2025 result on 13 November 2025 as the company stated that it had started the 2026 financial year with ‘strong’ momentum as opposed to the November characterisation of ‘good’ momentum”.

The RBC team went on to say:

The remainder of the language in relation to the 2026 outlook remains broadly consistent with that provided on November 13 and is consistent with our earnings forecasts. We retain our Outperform rating and $27.50 price target. Orica also reiterated that it is well-positioned to continue to deliver profitable growth across all three business segments.

If the Orica share price were to reach the RBC price target, it would mark a fresh 12-month high and represent a 16.3% increase from the current share price of $23.64.

Orica was valued at $11.1 billion at the close of trade on Monday.

The post Broker tips more than 15% upside for Orica shares after a “strong” start to the year appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Macquarie tips double digit upside for this ASX 200 stock
• Macquarie names 3 top dividend-paying ASX 200 shares to buy today
• Brokers rate these 3 top ASX shares as buys in December
• How much higher can this explosive ASX stock go?

Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you have a high tolerance for risk and want some exposure to the booming defence sector, then it could be worth considering the ASX stock in this article.

That’s because Bell Potter believes it could rise more than 100% from current levels over the next 12 months.

Which ASX defence stock?

The stock that Bell Potter is urging investors to buy is Titomic Ltd (ASX: TTT).

It is a $340 million cold spray technology company. It applies this technology in additive manufacturing and coating and repairs.

Bell Potter highlights that cold spray uses compressed gas to accelerate metal powders to supersonic speeds, enabling kinetic energy to fuse/plastically deform the particles onto a substrate in solid form. The company’s high pressure systems can accept speciality alloy powders and manufacture large high-spec components.

The broker was pleased to see that the ASX stock has signed a contract with a leading US defence prime contractor. It said:

TTT has announced an Early Manufacturing Development (EMD) contract with a leading US defence prime contractor, valued at US$1.7m and expected to be completed by mid-2026. TTT will manufacture “next generation” defence sector components at its Huntsville Alabama facility. The contract leverages TTT’s propriety Titomic Kinetic Fusion cold spray additive manufacturing capabilities.

The broker feels that while it is early days, the successful delivery of this contract could bring about further contracts. It explains:

While it is a relatively early stage proof of concept agreement, successful delivery could lead to qualification and low-rate initial production contracts. The “next generation” designation for “defence modernization initiatives” implies a high-end technology application. TTT has previously outlined defence markets to include hypersonic systems, satellites, munitions and launchers as key segments of the addressable market; hypersonics and satellites being the most advanced applications.

Big potential returns

According to the note, Bell Potter has retained its speculative buy rating and 50 cents price target on the ASX defence stock.

Based on its current share price of 23 cents, this implies potential upside of almost 120% for investors over the next 12 months.

Commenting on its speculative buy recommendation, Bell Potter concludes:

TTT provides leverage to the emerging application of its cold spray technology in AM for defence, aerospace and natural resources markets. US defence spending as a percentage of GDP is at a cyclical low and is expected to lift over the coming decade. NATO members have recently announced increased spending commitments. We expect news flow relating to TTT’s participation in US defence programs, new commercial agreements and non-dilutive government-backed funding. We have made no changes to our earnings outlook or valuation in this report.

The post Guess which ASX defence stock could rocket 100%+ appeared first on The Motley Fool Australia.

More reading

• Looking for 100% gains? These strategic minerals companies might be worth a look, Bell Potter says
• Why AUB, Titomic, Treasury Wine, and Woodside shares are rising today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

S&P/ASX 200 Index (ASX: XJO) gold stock, Ramelius Resources Ltd (ASX: RMS), is marching higher today.

Ramelius Resources shares closed trading yesterday for $3.71. In late morning trade on Tuesday, shares are changing hands for $3.74 apiece, up 0.7%.

For some context, the ASX 200 is up 0.1% at this same time.

Today’s outperformance is par for the course for Ramelius shareholders, with the ASX 200 gold stock now up 76.8% year to date, racing ahead of the 5.4% returns delivered by the benchmark index.

Atop those capital gains, Ramelius Resources shares also trade on a fully franked 2.1% trailing dividend yield.

The good news is that, according to the team at Macquarie Group Ltd (ASX: MQG), it’s not too late to buy this surging ASX share.

We’ll look at the broker’s bullish assessment below.

But first…

Why are Ramelius Resources shares outperforming today?

Ramelius Resources shares look to be getting a boost from this morning’s announcement that the company has entered into a Tenement Sale and Purchase Agreement with Bulletin Resources (ASX: BNR).

The agreement will see Ramelius acquire three of Bulletin’s Lake Rebecca Gold Project tenements, located in Western Australia, for $500,000 in cash.

The ASX 200 gold stock also enjoyed a big boost last week after announcing it intends to buy back up to $250 million in shares over the next 18 months. The board also revealed an increase in the minimum Ramelius dividend to 2.0 cents per share each year.

Commenting on the buyback program on the day, Ramelius Resources managing director Mark Zeptner said:

At the time of the release of our 5-Year Growth Pathway to 500koz, the Ramelius Board gave clear direction to management that we need to “maintain and grow” shareholder returns. We are demonstrating this today in the form of a A$250 million share buyback program and an increase in the minimum dividend payable.

Which brings us to…

Why Macquarie is tipping the ASX 200 gold stock for more outperformance

In a research report published on Friday, Macquarie sounded a bullish note on the gold miner’s share buyback plans. Macquarie said:

Following the announcement of a A$250m share buyback (commences 24-Dec-25) we incorporate it into our forecasts which drives a 3% EPS increase in FY28/29/30E due to the lower share count.

Macquarie is also optimistic about the ASX 200 gold stock’s recent exploratory drilling successes.

According to the broker:

Due to the encouraging exploration results from Penny we extend our LOM [life of mine] forecasts from 1QFY27 to 3QFY27 (+6mth increase) which drives a 4% uplift in our FY27E ore milled grades from 3.55g/t to 3.70g/t, with gold production increasing from 206koz to 214koz which is 2% above the mid-point of production for the 5-yr outlook in FY27.

Summarising its outperform rating on Ramelius Resources shares, Macquarie said, “RMS remains one of our mid-cap preferences due to its strong organic growth outlook, effective capital management framework, and asset divestment potential.”

The broker increased its target price for the ASX 200 gold stock by 2% to $4.60 a share.

That represents a potential upside of 23% from current levels.

And it doesn’t include those upcoming dividends.

The post This ASX 200 gold stock has surged 77% in 2025. Here’s why Macquarie expects it to leap another 23% appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• Why 4DMedical, Megaport, Meteoric Resources, and Ramelius shares are racing higher today
• Guess which ASX 200 gold stock is jumping 10% on $250m shareholder return

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has given back its morning gains and slipped into the red. At the time of writing, the benchmark index is down slightly to 8,633.6 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

AIC Mines Ltd (ASX: A1M)

The AIC Mines share price is down almost 3% to 51.5 cents. This is despite the copper and gold miner releasing a drilling update this morning. AIC Mines has been exploring extension drilling at the Jericho copper deposit located in Northwest Queensland. Commenting on the results, AIC Mines’ managing director, Aaron Colleran, said: “These results highlight the quality of the Jericho system – its continuity at depth and its significant scale. It reinforces our confidence in the long-term growth potential of this asset.”

ASX Ltd (ASX: ASX)

The ASX share price is down a further 2% to $52.43. This stock exchange operator’s shares have fallen this week after it committed to a strategic package of actions with ASIC. The company revealed that these commitments address the findings contained in an interim report from the expert ASIC Inquiry Panel. They are designed to deliver confidence in ASX as a provider of critical market infrastructure. One action will see the company accumulate an additional $150 million of capital above net tangible asset (NTA) value by 30 June 2027. This will then be in place until agreed milestones in the revised accelerate program are completed to the satisfaction of ASIC.

Karoon Energy Ltd (ASX: KAR)

The Karoon Energy share price is down almost 3% to $1.59. This may have been driven by weakness in oil prices overnight. Traders were selling down oil in response to positive developments with respect to Russia and Ukraine peace talks. The latter has reportedly agreed to scrap its application to join NATO.

Life360 Inc (ASX: 360)

The Life360 share price is down almost 6% to $32.71. This is despite there being no news out of the location technology company. However, with tech stocks on Wall Street being sold off amid concerns over the AI bubble, the selling appears to have spread to the ASX boards. It isn’t just Life360 shares that are down today. The S&P/ASX All Technology Index is down by a disappointing 1.6% at the time of writing.

The post Why AIC Mines, ASX, Karoon Energy, and Life360 shares are falling today appeared first on The Motley Fool Australia.

More reading

• Bell Potter names the best ASX tech stocks to buy in 2026
• 5 things to watch on the ASX 200 on Tuesday
• Why ASX, CSL, Galan Lithium, and NextDC shares are dropping today
• ASX Ltd shares drop 6% on $150m capital charge
• Why are ASX 200 tech stocks like Xero shares taking a beating on Monday?

Motley Fool contributor James Mickleboro has positions in Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360. The Motley Fool Australia has positions in and has recommended Life360. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Strategic minerals is a pretty broad term for everything from lithium to aluminium these days, but one thing many of these minerals have in common, as Bell Potter says in a recent report, is that their prices are sensitive to growing geopolitical and trade tensions.

This was thrown into sharp relief earlier this year when rare earths became a political hot button topic, with China tightening export controls on more of its own resources, sending the share prices of Australian producers and would-be producers higher.

In a recent research note to clients, Bell Potter has taken a tighter focus in terms of the strategic minerals companies it is forecasting will do well.

But as they said in their note, “geopolitical volatility and trade tensions are positive for strategic mineral and processing technology equities”.

They went on to say:

Western governments are increasingly seeking to reshore supply chains and manufacturing capabilities, particularly in high-technology and aerospace/ defence sectors. US defence spending as a percentage of GDP is at a cyclical low and is expected to lift over the coming decade. NATO members have recently announced increased spending commitments.

In terms of stocks they are recommending, they have focused in on high-tech production processes which could differentiate the companies.

Here are their picks:

Alpha HPA Ltd (ASX: A4N)

Bell Potter says this company’s proprietary process “produces ultra-high purity aluminium compounds with applications in technology growth sectors including semiconductors, lithium-ion batteries, LED displays/lighting, and direct lithium extraction”.

The analysts say the process is disruptive in terms of its low production costs, “ultra-high” product purity, and low emissions. Australian chemicals group Orica Ltd (ASX: ORI) is also a shareholder.

The broker has a speculative buy rating on the stock and a price target of $2 compared with 71 cents at the moment.

IperionX Ltd (ASX: IPX)

Bell Potter says IperionX “has the potential to disrupt the incumbent titanium supply chain through materially lowering production costs and manufacturing waste”.  

The analysts say the company started producing titanium on a large scale this year at its Virginia US site, and will now scale that up, “and progress commercial relationships with aerospace, automotive, luxury goods and government end users”.

As they said:

Titanium is a highly strategic metal given its applications across the defence and aerospace sectors, with around 95% of current US supply met through imports, predominantly from Japan. Russia and China account for more than 70% of global titanium supply.

Bell Potter has a speculative buy recommendation on the stock and a price target of $9.25 compared with $5.01 currently.

Titomic Ltd (ASX: TTT)

Three-D printing company Titomic has applications in the defence, aerospace, and natural resources markets Bell Potter says, with its technology bringing “unique manufacturing capabilities around material selection and component properties”.

We expect news flow relating to Titomic’s participation in US defence programs, new commercial agreements and non dilutive government-backed funding.

Bell Potter has a speculative buy recommendation on the stock and a 50 cent price target compared with 22 cents currently.

The post Looking for 100% gains? These strategic minerals companies might be worth a look, Bell Potter says appeared first on The Motley Fool Australia.

More reading

• IperionX secures US Navy deal with Carver Pump order
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• The 4 worst performing ASX 200 stocks to hold in November unmasked
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The price of lithium has experienced a resurgence in recent months, with demand growth, inventory reduction, and regulatory tightening helping to fuel the rally.

And some leading ASX 200 mining stocks have been riding the wave.

For example, shares in Pilbara Minerals Ltd (ASX: PLS) have rocketed by 200% in the past six months.

Mineral Resources Ltd (ASX: MIN) shares have also more than doubled across the same timeframe.

And fellow Western Australian lithium miner Liontown Resources Ltd (ASX: LTR) has delivered a 104% return for its shareholders.

Looking ahead, this upbeat sentiment in the lithium sector could be set to continue, according to financial services firm Bell Potter.

The broker stated:

Lithium market supply-demand fundamentals are improving into 2026, supporting higher prices. Demand from Electric Vehicle take-up and Energy Stationary Storage continues to experience high rates of growth. While there is idled capacity on the lithium supply-side, we expect sustained higher prices will be required to support any production restarts.

And one ASX lithium stock could be set to benefit from this positive outlook.

Strategically important ASX lithium stock

Ioneer Ltd (ASX: INR) is advancing its wholly owned Rhyolite Ridge lithium and boron project in the US state of Nevada.

A recent economic evaluation pointed to annual production totalling more than 24,000 tonnes of lithium carbonate equivalent, alongside 135,000 tonnes of boric acid.

And according to Bell Potter, the project represents a strategically important source of future lithium supply in the US.

It noted:

In January 2025, Rhyolite Ridge received funding support from the US Department of Energy through a US$996m, 20-year loan. The company is currently running a project sell-down process, which we expect to materially de-risk the development’s remaining funding requirements. Project development should commence in 2026 to enable first production in 2029.

Not only that, but the prospect of boron production also appears to have caught the eye of Bell Potter analysts.

Critical mineral

Bell Potter noted that boron recently joined lithium on the US list of critical minerals.

In essence, boron is a rare mineral that plays a vital role in a wide range of sectors such as energy, defence, aerospace, and agriculture.

It also boasts everyday applications, including in cookware, consumer electronics, and medicine.

According to Ioneer, Turkey and the US account for about 80% of global boron production, including 30% supply coming from just the one mine in California.

It believes that Rhyolite Ridge could be the only construction-ready and fully permitted boron deposit in the US, and possibly the world.

Overall, boron is forecast to account for about 25% of the project’s future revenue.

Share price in focus for this ASX lithium stock

Ioneer shares have already jumped by 50% over the past six months, rising to $0.17 per share at the time of writing.

However, Bell Potter believes that this powerful rally could continue into 2026.

The broker has placed a speculative buy rating on the company, with a price target of $0.36 per share.

This equates to 112% upside potential for investors in this ASX mining stock.

The post Forget Pilbara Minerals! Expert says this ASX lithium stock could soar 112% appeared first on The Motley Fool Australia.

More reading

• Bell Potter names the best ASX critical minerals stocks to buy

Motley Fool contributor Bart Bogacz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What’s unusual is that the Google parent was substantially smaller than the software giant until recently, when Alphabet pulled ahead. Considering that surge by Alphabet, is it the better investment among multitrillion-dollar companies in the AI realm, or should investors stick with Microsoft?

The case for Microsoft

Microsoft has long been a leading cloud company, but it stood out in the AI race because early on it took what is now a 27% ownership stake in OpenAI. Thus, upon the release of GPT-4, that partnership appeared to put Microsoft stock in a strong position as the frenzy around generative AI began to take hold.

To this end, it has developed its own AI engine, called Copilot, which stands out within Microsoft’s ecosystem. Still, Microsoft has likely drawn the most investor attention from its partnerships. Despite its OpenAI stake, both companies are free to partner with other AI companies. More recently, Microsoft made an agreement with Anthropic to scale Claude AI on Azure servers powered with Nvidia chips.

Microsoft can also afford such investments. Over the last 12 months, it generated almost $78 billion in free cash flow, and that does not include the $69 billion in capital expenditures (capex) invested over that time.

Moreover, with the earlier ties to OpenAI, Microsoft rose significantly in prior years, so year-to-date gains have slowed to about 14%. It also trades at a P/E ratio of 34, though it is not far above the S&P 500 average of 31. Ultimately, given its continued progress in AI, that slightly above-average valuation is unlikely to stop the steady rise of Microsoft stock.

Why investors might choose Alphabet

After ChatGPT came on the scene, investors began to question whether Alphabet’s Google Search engine was on the way to obsolescence. Its AI-enabled queries bypassed the ads that have long been the source of most of Alphabet’s income.

However, Alphabet launched Google Gemini to compete with ChatGPT. At first, it seemed like just another AI engine, but over the last few months, it has emerged as the site of choice for real-time information, video generation, and unstructured prompts thanks to the improvements in Gemini 3.

Additionally, even amid the skepticism, Alphabet’s revenue grew, and it continued to generate massive free cash flows. This has funded Gemini’s improvements, along with its other AI-related businesses, such as Google Cloud and the autonomous driving platform Waymo.

Furthermore, investors should expect continued improvements as the company plans to spend $91 billion to $93 billion on capex this year alone. Despite that spending, its free cash flow was just under $74 billion over the last 12 months, an indication it can afford these massive outlays.

Also, despite gaining around 70% so far this year, Alphabet stock trades at a 32 P/E ratio, close to the S&P 500 average. When one also factors in the increasing strength of its AI-related businesses, such conditions could make the Google parent an attractive choice.

Microsoft or Alphabet?

Both stocks have shown they are industry leaders in AI, and thus, it is likely that both stocks will continue moving higher. However, if you’re choosing between the two, Alphabet likely holds the edge.

Indeed, investors should commend Microsoft for its early moves in AI and its ability to make itself essential to more than one major AI engine.

Still, both the stock price and valuation seem to already reflect that growth. Conversely, Alphabet investors may still benefit from a delayed reaction to the Google parent’s AI.

Alphabet has spent more than Microsoft on capex, and it has overcome perceptions that AI was passing it by. When also considering its slightly lower valuation, Alphabet should remain in a stronger position to drive higher returns over time.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Better (almost) $4 trillion AI stock to buy now: Microsoft or Alphabet appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• 3 ASX ETFs that benefit from unavoidable megatrends
• Why the best-performing “Magnificent Seven” stock of 2025 is still a buy for 2026
• What Warren Buffett’s latest portfolio moves say about the market
• These 2 magnificent seven AI stocks might be offering investors a once-in-a-decade buying opportunity before the New Year.
• The 3 smartest quantum computing stocks to buy with $1,000 in 2026

Will Healy has no position in any of the stocks mentioned.  The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) is fighting hard to stay in positive territory. At the time of writing, the benchmark index is up 0.1% to 8,646.3 points.

Four ASX shares that are rising more than most today are listed below. Here’s why they are climbing:

4DMedical Ltd (ASX: 4DX)

The 4DMedical share price is up a further 15% to $2.82. Investors have been buying this respiratory imaging technology company’s shares this week following news that it has received regulatory approval in Canada for its CT:VQ product. It is the world’s first and only non-contrast, CT-based ventilation-perfusion imaging solution. 4DMedical highlights that this approval marks a significant expansion of 4DMedical’s presence in North America and allows immediate commercial deployment of CT:VQ across Canada through the company’s strategic partnership with electronics giant Philips.

DroneShield Ltd (ASX: DRO)

The DroneShield share price is up 20% to $2.76. This morning, this counter drone technology company announced a new contract win valued at $49.6 million from an in-region European reseller on behalf of a European military end-customer. The contract is for handheld counter drone systems, associated accessories, and software updates. Over the past three years, DroneShield revealed that it has received a total of 15 contracts from this reseller worth over $86.5 million.

Electro Optic Systems Holdings Ltd (ASX: EOS)

The EOS share price is up a further 14% to $7.37. The catalyst for this was a big announcement from the defence and space company on Monday. That announcement revealed that EOS has signed a binding conditional contract worth $120 million to manufacture and supply a 100kW high energy laser weapon to a company in the Republic of Korea. This represents the second export order for a 100kW class laser defence system, following a first export order to a Western European customer earlier this year. In response, this morning Bell Potter reiterated its buy rating with an improved price target of $9.00.

Star Entertainment Group Ltd (ASX: SGR)

The Star Entertainment share price is up almost 5% to 11 cents. This morning, the struggling casino and resorts operator announced the exit of its CEO, Steve McCann, with immediate effect. Bruce Mathieson Jnr will take on additional duties as executive chair while a search for a permanent CEO is conducted. McCann said: “Now is the right time for new leadership to be put in place with the experience and passion to build on that momentum and take The Star forward.”

The post Why 4DMedical, DroneShield, EOS, and Star shares are rising today appeared first on The Motley Fool Australia.

More reading

• Why it isn’t too late to buy Electro Optic Systems (EOS) shares
• Why are DroneShield shares jumping 20% today?
• Up 10x since July, could this hot ASX stock be the next Droneshield?
• DroneShield bags $49.6m European military contract: What investors need to know
• 3 ASX mid-cap rockets that could become future blue chips

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield and Electro Optic Systems. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.