Category: Stock Market

The HomeCo Daily Needs REIT (ASX: HDN) share price is in focus today, after the company posted a $219 million preliminary unaudited valuation gain for the half-year ended 31 December 2025, representing a 4.5% lift in portfolio value, and completed an $810 million debt refinancing.

What did HomeCo Daily Needs REIT report?

• Preliminary unaudited valuation gain of $219 million, up 4.5% on June 2025 portfolio value
• Gearing remains within target range at the midpoint of 30–40%
• Refinanced $810 million of debt, now maturing July 2028, with a 42.5 basis point margin improvement
• Distribution of 2.15 cents per unit for the December quarter declared
• FY26 distribution guidance reaffirmed at 8.6 cents per unit; FFO guidance at 9.0 cents per unit

What else do investors need to know?

The valuation increase was driven by strong net operating income growth, solid tenant demand, and a slight tightening of capitalisation rates to 5.51%. This is the fourth straight period HomeCo Daily Needs REIT has posted positive net revaluation gains, bolstered by ongoing tenant-led developments.

Approximately 70% of HomeCo Daily Needs REIT’s debt is hedged until December 2026, helping manage interest rate risk. The December quarter distribution comes with an active Distribution Reinvestment Plan, allowing unitholders to reinvest with no discount.

What did HomeCo Daily Needs REIT management say?

HomeCo Daily Needs REIT Fund Manager Paul Doherty said:

This is the fourth consecutive period HDN has recorded positive net revaluation gains. The positive valuation gain has been driven by strong net operating income growth, accretive tenant led developments and capitalisation rate tightening.

What’s next for HomeCo Daily Needs REIT?

Looking ahead, HomeCo Daily Needs REIT has reaffirmed its guidance for FY26, expecting distributions of 8.6 cents per unit and FFO of 9.0 cents per unit. The company will continue focusing on high occupancy, tenant-led development opportunities, and maintaining a strong balance sheet.

HomeCo Daily Needs REIT is also a strategic investor in the Last Mile Logistics fund, aiming to further grow its footprint in convenience-based, non-discretionary retail and essential last mile infrastructure.

HomeCo Daily Needs REIT share price snapshot

Over the past 12 months, HomeCo Daily Needs REIT shares have risen 15%, outpacing the S&P/ASX 200 Index (ASX: XJO) which has risen 3% over the same period.

View Original Announcement

The post HomeCo Daily Needs REIT posts $219m gain and refinances $810m debt appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart 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 HomeCo Daily Needs REIT. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

The Xero Ltd (ASX: XRO) share price has been on a rough run in recent months, falling close to 30% from its highs. For a company long seen as one of the premium tech names on the ASX, the pullback has caught the eye of many investors, including me.

At yesterday’s market close, Xero shares were changing hands for about $114. It has been nearly two years since the stock traded this low, and analysts continue to place their estimates much higher than that.

Which brings us to the obvious question: has the market gone too far, or is this a rare chance to pick up a high-quality growth stock at a serious discount?

Why has the Xero share price struggled?

Unfortunately for Xero investors, the recent slide hasn’t come out of nowhere. The company has faced a combination of headwinds, including slower subscriber growth in important regions, higher operating costs, and rising competition. With small-business conditions softening as well, several brokers cut their price targets, which weighed further on the Xero share price.

There were also concerns that Xero’s margins might take longer to improve than previously hoped, especially with the company continuing to invest heavily in product development and AI features.

Has the market priced in too much bad news?

Despite the slump, Xero remains a high-quality, global business with a long runway ahead of it. The company continues to grow revenue at a solid pace, subscriber numbers remain strong overall, and long-term adoption of cloud accounting software still has plenty of room to expand, particularly in the UK and North America.

Several analysts have flagged the recent sell-off as overdone. Current broker price targets generally sit between $145 and $170, with Macquarie going as far as tipping nearly 90% upside from current levels.

Xero has also been trimming costs, making the business more efficient, and being more selective with its spending.

What could help improve sentiment

A few things may help shift the market’s view over the next 12 to 18 months, including steadier subscriber growth in major markets, stronger margins, continued interest in Xero’s AI-driven tools, and improving conditions for small businesses.

If Xero can show clear progress across these areas, it wouldn’t take much for investor confidence to quickly rebuild.

So, is this a buying window for long-term investors?

A 30% pullback in a high-quality tech company is not something you see very often. Xero remains a global leader in a subscription-based market, with a long runway still ahead of it.

Whether this turns out to be one of those buying moments will depend on what management delivers next, but at these levels, the Xero share price is starting to look much more appealing for long-term investors.

The post When a top ASX stock falls 30%, it gets my attention. Here’s why appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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 and Xero. The Motley Fool Australia has positions in and has recommended Macquarie Group and Xero. 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.

November was a tough month for Nvidia (NASDAQ: NVDA) investors. Despite reporting another blowout quarter on November 19th, the artificial intelligence (AI) juggernaut’s stock fell 12.6% from the closing bell on Oct. 31 through the end of trading on Nov. 28.

November was marked by growing fear of an AI bubble with Nvidia at its very heart. While Nvidia itself is making incredible amounts of money selling picks and shovels to AI gold miners, investors are wondering just how much gold there really is and if it’s enough to justify buying Nvidia’s extremely expensive equipment — at least at current levels.

While that concern has been on the mind of shareholders for some time, it peaked this month after Alphabet‘s Google released its latest AI model, Gemini 3. The large language model (LLM) was widely received as an improvement on the latest models from both OpenAI and Anthropic, but critically, the model was trained with Google’s own chips, not Nvidia’s.

Google’s Gemini 3 raises questions about Nvidia’s AI chip dominance

These chips — called TPUs — are specifically designed and optimized for the kinds of operations that Google uses to train its LLMs, making them both cheaper to produce and cheaper to run. That directly challenges the primary narrative driving Nvidia’s success, that its chips are so much more advanced than the competition that it is worth paying a hefty premium for them.

And while it is still true that Nvidia’s GPUs are far more powerful and flexible than Google’s TPUs, given Gemini 3 is so capable, it’s reasonable to wonder why Google — or any of the other massive hyperscalers with the means to develop their own chips — wouldn’t move toward relying primarily on their own chips.

Record Q3 earnings couldn’t stop the November sell-off

Despite this fear, however, Nvidia’s Q3 earnings showed no signs that its orders are slowing down — quite the opposite. It once again delivered massive top- and bottom-line growth, both year-over-year and quarter over quarter, with gross margins that one would expect from a Software as a Service (SaaS) company, not a chipmaker. 

Nvidia stock has regained its footing, rising roughly 4.3% so far in December. While peak fear seems to have subsided, I think investors should still be cautious. It is hard to argue with the eye-popping numbers Nvidia is delivering, but I do question how long its place at the center of the AI boom — and the AI boom itself — can continue.

There has been limited evidence of AI’s impact so far in the real economy, and while there is certainly a lot of promise in the technology, there comes a point where that won’t be enough for shareholders to stomach the hundreds of billions being invested.

Nvidia’s valuation is entirely built on its growth trajectory continuing apace. In the near term, there are no real signs that will falter. Long term, however, I have my doubts.

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

The post Nvidia stock price slumped 12.6% in November. What’s next for the artificial intelligence (AI) behemoth? 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.

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Johnny Rice 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 and Nvidia. The Motley Fool Australia has recommended Alphabet and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

For investors with a long time horizon and an appetite for higher returns, growth-focused exchange traded funds (ETFs) can be an excellent way to capture emerging trends and powerful compounding without the pressure of picking individual winners.

Whether you are searching for small caps, global tech, or diversified high-growth portfolios, there is likely to be an ASX ETF out there for you.

With that in mind, let’s take a look at three funds that could be top picks for growth investors heading into 2026.

Betashares Australian Small Companies Select ETF (ASX: SMLL)

Small caps are often where the next generation of market leaders begin, but they can also be volatile and difficult to analyse individually.

The BetaShares Australian Small Companies Select ETF solves this by focusing on profitable, higher-quality small stocks rather than speculative miners or businesses that are unsustainably burning cash.

Its index screens for companies with positive earnings, strong balance sheets, and reasonable valuations. That means investors avoid the traditional pitfalls of the Australian small-cap universe, which is often littered with unprofitable explorers and early-stage businesses with uncertain futures.

Current holdings include Capricorn Metals Ltd (ASX: CMM), Codan Ltd (ASX: CDA), and Breville Group Ltd (ASX: BRG).

This fund was recently recommended by analysts at Betashares.

Betashares Diversified All Growth ETF (ASX: DHHF)

Another ASX ETF for growth investors is the Betashares Diversified All Growth ETF.

If you want ultimate simplicity with maximum growth exposure, it is hard to beat this fund. This ASX ETF is invested in a blend of large, mid, and small cap stocks from Australia, global developed and emerging markets.

Betashares notes that this means it offers investors exposure to an all-cap, all-world share portfolio with the potential for high growth over the long term. In total, the fund provides exposure to approximately 8,000 stocks that are listed on over 60 global exchanges.

It was also recently recommended by analysts at Betashares.

Betashares Cloud Computing ETF (ASX: CLDD)

A third ASX ETF for growth investors to look at is the Betashares Cloud Computing ETF.

Businesses across the world now rely on cloud platforms to run software, manage data, deploy artificial intelligence, and operate at scale.

And with cloud adoption still expanding rapidly, this ASX ETF gives investors direct exposure to the companies powering that transformation.

The fund includes global cloud leaders such as Shopify (NASDAQ: SHOP), ServiceNow (NYSE: NOW), and Snowflake (NYSE: SNOW). These companies are deeply embedded in the digital economy, providing the infrastructure and software that modern organisations cannot function without.

It was recently recommended by analysts at Betashares.

The post 3 stellar ASX ETFs for growth investors to buy in 2026 appeared first on The Motley Fool Australia.

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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 ServiceNow, Shopify, and Snowflake. The Motley Fool Australia has recommended ServiceNow and Shopify. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Woolworths Group Ltd (ASX: WOW) shares ended in the green at the close of the ASX on Wednesday. The shares ended the day 0.68% higher at $29.52 a piece. The supermarket giant’s shares are now down 12.17% from their annual peak in August and 2.57% lower than this time last year.

What happened to Woolworths shares?

The supermarket giant’s share price dived nearly 20% after it posted a disappointing FY25 result in late-August. The stock dropped to an all-time low of $25.91 a piece in mid-October but was saved from any further decline after the company posted a more positive first-quarter sales update.

Since bottoming out, the Woolworths share price has recovered just over 13% to the current trading price.

Are Woolworths shares a buy today?

Woolworths is one of the largest and most established supermarket businesses in Australia, alongside Coles. Its oligopoly, with supermarket rival Coles, mean the two supermarkets have significant power over the Australian grocery sector. The latest Australian Competition and Consumer Commission (ACCC) estimates that Woolworths holds approximately 38% of Australia’s nationwide supermarket grocery sales.

It’s this dominance which gives Woolworths a competitive advantage in the retail space.

Not only is the business huge, it is also defensive. As a grocery retailer, Woolworths will always see relatively stable demand for its products, even during a downturn or period of uncertainty. Everyone needs to eat!

Another obvious reason that Woolworths shares are a great buy is its reliable passive income. The business is well-known for its lengthy history of paying consistent, and sometimes generous, dividends.

In FY25, the supermarket giant handed out a total of 85 cents per share, fully franked. Bell Potter expects the ASX retail stock will pay a boosted fully-franked dividend of 91 cents per share in FY26 and then $1 per share in FY27. 

What do the experts think?

Analysts are mostly optimistic about the stock’s share price trajectory over the next 12 months. Data shows that 6 out of 14 analysts have a buy or strong buy rating on Woolworths shares. The remaining 8 have a hold rating. 

The average target price is $30.29; however, some expect it could go as high as $33. This implies a potential 2.62% to 11.79% upside for investors over the next 12 months, at the time of writing.

Morgans is one broker which is more bearish on the shares. Its team has a hold rating on Woolworths with a price target of $28.25. The broker said it thinks the stock is currently fully valued and would “prefer to wait for further evidence of improvement before reassessing our view”.

The post Woolworths shares are down 12% from their peak. Should those who don’t own them consider buying now? appeared first on The Motley Fool Australia.

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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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Woolworths Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This week, the Reserve Bank of Australia held the cash rate at 3.6%.

The lead up to this decision saw a swing in the consensus views of many experts. 

Less than two months ago, markets were anticipating further rate cuts this year, however now the sentiment has shifted to expect rate hikes in 2026. 

The team at Wilsons Advisory and Canaccord Genuity have provided an overview of how sectors have historically responded to this kind of economic climate. 

Greg Burke, Equity Strategist said the recent RBA monetary policy meeting reaffirmed that the central bank has well and truly moved from an easing bias to incrementally hawkish on-hold stance, with increasing risks of a 2026 interest rate hike. 

Despite this, the outlook for domestic equities remains constructive. Household spending remains resilient, the RBA’s three rate cuts this year have arguably yet to fully flow through to consumer activity, and loose domestic fiscal policy continues to support economic growth.

Against this backdrop, the report assesses the interest rate sensitivities of key ASX sectors.

Historically performing sectors with RBA hikes

The report said two of the sectors that have historically outperformed during RBA hike periods are: 

• Resources – According to Wilsons Advisory, a more hawkish RBA combined with a dovish Fed supports AUD strength, historically a key driver of mining sector outperformance. Ultimately, resources are more sensitive to global growth than domestic demand. 
• Consumer staples – Staples typically outperform into RBA hiking periods, and valuations look attractive relative to Cyclical Retail, creating scope for a rotation, particularly if the RBA turns more hawkish.

The report also highlighted that it is positive on the healthcare sector. 

Despite historical underperformance pre-RBA hikes, relative valuations are already at 20-year lows, supporting a more constructive sector view.

It’s worth noting that while banks often outperform ahead of RBA hikes, Wilsons Advisory said sector valuations are elevated relative to prior cycles, and earnings momentum is mixed, which tempers its outlook.

Sectors likely to underperform

The report from Wilsons Advisory also said retailers typically underperform prior to RBA hikes and are vulnerable to higher rates, particularly as valuations are demanding. We prefer global earners.

According to the report, domestic cyclicals – including media, retail and other parts of the broader Consumer Discretionary sector – are particularly vulnerable to higher short-term interest rates and typically underperform in the lead up to RBA rate hikes, as investors anticipate a weaker environment for household spending.

Another sector to potentially underperform during RBA rate hike periods is real estate. 

Wilsons Advisory said similar to domestic cyclicals, the RBA’s pivot to a more hawkish on-hold stance removes a key tailwind for A-REITs and other long-duration assets.

However, policy is yet to become an outright headwind with the RBA remaining on-hold.

Stocks to watch 

In the resources sector, the report said given the sector’s higher sensitivity to the global growth pulse than to domestic demand, it remains positive on resources irrespective of the RBA’s policy stance. 

Our preferred large-cap exposures are copper: Sandfire Resources NL (ASX: SFR), aluminium: Alcoa (ASX: AAI) and gold: Evolution Mining Ltd (ASX: EVN), Northern Star Resources Ltd (ASX: NST).

In the consumer staples sector, Wilsons Advisory noted it has outperformed in the lead up to the past three RBA hiking cycles. 

While the sector is exposed to the broader consumer environment, household spending on essentials – particularly food and groceries – is typically highly resilient through the economic cycle. This has historically driven rotations out of Cyclical Retailers and into the more defensive Consumer Staples sector, as the market anticipates tougher times ahead for consumers.

Its preferred stock is Woolworths Group Ltd (ASX: WOW). 

The post RBA watch: Sectors to target and avoid should interest rates rise – Expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell 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 positions in and has recommended Woolworths Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX defence stocks have surged in 2025. 

This has been influenced by ongoing geopolitical tension, which has prompted governments to spend more on their defence sector. 

This includes development of technology such as drones, AI or electronic warfare. It also includes equipment such as missiles or submarines. 

Australia is included in this defence spending push. 

In March this year, the Australian government announced it was investing an additional $50.3 billion into the Australian Defence Force (ADF).

Yesterday, the team at Bell Potter released a report including analyst outlooks and stock picks for December 2025. 

In the report, Baxter Kirk, Industrials Analyst, said global defence strategy is undergoing a structural pivot, driven by the proliferation of low-cost, high-lethality unmanned systems in recent conflicts. 

This rise of asymmetric warfare has exposed the economic inefficiency of traditional air defence, creating an urgent mandate for “attritable” drones and cost-effective counter-measures. 

We view the twin themes of resilient drone connectivity and counter-drone solutions as key drivers of defence procurement for the coming cycle.

The report also included two ASX defence stocks with buy recommendations.

Electro Optic Systems Holdings Ltd (ASX: EOS)

The company is a provider of counter-drone solutions, remote weapon systems (RWS), and space control technologies. 

Its stock price has already risen by 266.41% in 2025. 

According to Bell Potter’s report, following the landmark A$125m award for the world’s first export of a 100kw High Energy Laser Weapon (HELW) in August 2025, EOS has secured a firstmover advantage in the high-value HELW counter-drone vertical. 

Looking ahead to 2026, the broker said it sees upgrade potential to revenue estimates, driven by increasing global capital allocation toward counterdrone capabilities. 

Specifically, Bell Potter anticipates the advancement of HELW contracts (>1 unit) through the sales pipeline alongside continued awards for conventional and counter-drone RWS.

As well as a buy recommendation, Bell Potter has a price target of $8.10 on this ASX defence stock. 

From yesterday’s closing price of $4.80, this indicates a further upside of 68.75%. 

Elsight Ltd (ASX: ELS)

Elsight is a key supplier of communication modules to drone manufacturers. 

Its flagship product, Halo, integrates multiple communication pathways (5G, LTE, SATCOM, RF) into a single resilient, encrypted data link, functioning as a mission-critical enabler for Beyond Visual Line of Sight (BVLOS) operations. 

According to Bell Potter, CY25e marked a pivotal inflection point for ELS, with the company achieving profitability and delivering estimated revenue growth of 12x YoY (BPe). 

We enter CY26e viewing Halo as a marketleading enabler of BVLOS connectivity for unmanned systems. Accordingly, we forecast a 41% revenue CAGR over CY25-28e, driven by the rapid proliferation of unmanned systems across both defence and commercial verticals.

Elsight has risen by 473.68% already in 2025. 

The broker has a price target of $2.00 along with a buy recommendation. 

This indicates this ASX defence stock is trading close to fair value or slightly over at $2.18. 

The post Two ASX defence stocks to add to your christmas wish list appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell 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 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.

Do you have room for some new additions in your income portfolio? If you do, then it could be worth looking at the three ASX dividend shares in this article.

They have been given buy ratings by brokers, who are forecasting attractive and growing payouts in the near term. Here’s what they are recommending to clients:

HomeCo Daily Needs REIT (ASX: HDN)

HomeCo Daily Needs REIT could be an ASX dividend share to buy.

It is a real estate investment trust (REIT) that focuses on convenience-based retail centres such as supermarkets, pharmacies, and medical clinics. These are assets that tend to have stable tenants and long leases.

At the last count, its portfolio was valued at $4.9 billion, had 99% occupancy, and a weighted average lease expiry of 4.9 years.

UBS is a fan of the company and believes it is positioned to pay dividends of 8.6 cents per share in FY 2026 and then 8.7 cents per share FY 2027. Based on its current share price of $1.36, this would mean dividend yields of 6.3% and 6.4%, respectively.

The broker has a buy rating and $1.53 price target on its shares.

IPH Ltd (ASX: IPH)

Another ASX dividend share that could be a buy according to analysts is IPH.

It is an international intellectual property services group working throughout 26 IP jurisdictions, with clients in more than 25 countries. The company has a diverse client base of Fortune Global 500 companies and other multinationals, public sector research organisations, SMEs, and professional services firms.

Morgans is a fan of the company and is expecting it to reward shareholders with fully franked dividends of 37 cents per share in FY 2026 and FY 2027. Based on its latest share price of $3.42, this would mean large 10.8% dividend yields for both years.

Morgans has a buy rating and $6.05 price target on its shares.

Jumbo Interactive Ltd (ASX: JIN)

A third ASX dividend share for income investors to look at is Jumbo Interactive.

It is the online lottery ticket seller and lottery platform provider behind the Oz Lotteries app and Powered by Jumbo platform.

Morgan Stanley has been pleased with its positive start to the year. It believes that this leaves it positioned to pay fully franked dividends of 57.7 cents per share in FY 2026 and then 68.4 cents per share in FY 2027. Based on its current share price of $11.32, this would mean dividend yields of 5.1% and 6%, respectively.

The broker currently has an overweight rating and $16.80 price target on its shares.

The post These top ASX dividend shares offer 5% to 10% yields appeared first on The Motley Fool Australia.

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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 Jumbo Interactive. The Motley Fool Australia has recommended HomeCo Daily Needs REIT, IPH Ltd , and Jumbo Interactive. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

When one ASX share is rated as a buy by an analyst, that’s interesting. When numerous experts rate a business as a buy, that could suggest there’s an opportunity for investors to take advantage of.

Share prices are always changing and experts are always looking to jump on ideas that look undervalued. At the moment, there are a few names that are highly rated by multiple leading brokers, let’s take a look at why they’re viewed as buy ideas.

Flight Centre Travel Group Ltd (ASX: FLT)

According to a collation of analyst ratings by Commsec, there are currently 11 buy ratings on the business.

One of the brokers that rates Flight Centre as a buy is UBS. The broker describes Flight Centre as a global travel agent in both the leisure and corporate travel segments, with key markets being Australia, New Zealand, the UK, Canada, South Africa, the US, Hong Kong, China, Singapore, India and the UAE.

UBS notes that the company is expecting flat profit before tax (PBT) growth in the first half of FY26, which places emphasis on the second half achieving growth of between 8% to 28% to achieve its FY26 guidance range.

The broker notes that ongoing productivity initiatives in the corporate division are driving efficiency improvements. The FY26 first quarter saw total transaction value (TTV) grow by 7%, but the company’s headcount reduced by 5%.

In the leisure segment, there are some green shoots emerging in US bookings from Australia, according to UBS.

UBS is projecting the ASX share can deliver net profit after tax (NPAT) of $222 million in FY26. The broker has a price target of $14.40 on Flight Centre shares.

Nextdc Ltd (ASX: NXT)

According to a collation of analyst ratings by Commsec, there are currently 15 buy ratings on the business.

UBS describes Nextdc as Australia’s leading data centre as a service, with multiple locations in Australia and the wider Asia and Pacific region.

UBS is one of the brokers that rates Nextdc following a positive update by the ASX share.

The broker said that Nextdc is on track for a new record of contract wins in FY26 by adding 71MW in the year to date, compared to 72MW in FY25.

Demand for capacity in Victoria remains “very strong” and it thinks there could be increases to analyst estimates in the business manages to sign another round of contracts in the second half of FY26.

The broker said that it’s waiting for approval for the new Sydney data centres (S4 and S5). UBS is positive that approval is a key catalyst to further accelerate the MW contracted and activation profile.

Due to the demand and supply dynamic in NSW, UBS believes there is “strong scope for early contract wins” once construction starts.

UBS concluded on the ASX share:

In our view, the structural AI thematic is reaccelerating, cloud remains very strong and we are likely to go back into a period of investors wanting to increase exposure to both.

The broker has a price target of $21.85 on Nextdc shares, implying a possible rise of 60% over the next year.

The post 2 ASX shares highly recommended to buy: Experts appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison 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 Flight Centre Travel Group. 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.

Over the past six months, Tesla (NASDAQ: TSLA) and Alphabet (NASDAQ: GOOGL) have both delivered eye-catching gains as investors seemingly crowd into anything tied to AI (artificial intelligence). Tesla shares are up more than 45% in that span, while Alphabet has climbed nearly 70% and is closing in on a $4 trillion market capitalization.

The stories behind those moves look very different. Tesla is still primarily an electric vehicle company trying to reinvent its future around autonomous driving and humanoid robots. Alphabet, meanwhile, generates cash from search advertising, YouTube, and a fast-growing cloud computing business — and it is threading AI into all of these offerings.

Both companies could end up major winners from AI in 2026 and beyond. Yet when valuation and these companies’ underlying business fundamentals are weighed together, Alphabet arguably looks like the better option for investors looking for more investment exposure to AI. 

Tesla: AI could transform its business

The bull case for Tesla stock these days hinges less on boosting electric vehicle sales and more on converting its AI efforts into scalable software and services. At least, that’s the only way to explain the stock’s valuation, which features a price-to-earnings ratio of just over 300 as of this writing. Tesla’s autonomous driving network (Robotaxi), its autonomous driving subscriptions, and its humanoid robot efforts (Optimus) sit at the center of that ambition.

Recent financial results, however, highlight the gap between that vision and today’s reality.

In the first half of this year, Tesla’s revenue fell 10.6% year over year to $41.8 billion as automotive sales dropped almost 18%. Third-quarter results improved, with revenue rising about 12% year over year to $28.1 billion. But operating income still declined about 40% — and operating margin for the period was only 5.8% (down from 10.8% in the year-ago period). In addition, the rebound in sales trends may prove to be temporary, because the period benefited from a pull-forward in demand as consumers rushed to place orders before the federal electric vehicle credit expired on Sept. 30.

Management has been clear that AI is a major reason profitability remains under pressure. Not only has it been a significant driver of research and development spending recently, but management expects AI to weigh on its business next year.

“On the [capital expenditures] front,” said Tesla chief financial officer Vaibhav Taneja in the company’s third-quarter earnings call, “while we are expecting to be around $9 billion for the current year, we’re projecting the numbers to increase substantially in 2026 as we prepare the company for the next phase of growth in terms of not just our existing businesses, but our bets around AI initiatives, including Optimus.”

This spending may pay off if Tesla can scale and commercialize its Robotaxi network and move Optimus from demonstrations to meaningful production. For now, however, almost all of Tesla’s revenue still comes from its cyclical auto business, as well as its smaller but fast-growing energy business.

Alphabet: More profitable and cheaper

Alphabet’s AI push looks more incremental but also more durable than Tesla’s. Google Search and YouTube already rely heavily on machine learning to match users with relevant information and ads, and Alphabet’s cloud computing business, Google Cloud, is selling AI infrastructure and tools directly to customers. Overall, Alphabet’s move to integrate AI across its business seems to be creating an inflection in revenue growth.

Alphabet’s third-quarter revenue rose 16% year over year to $102.3 billion, with Google Cloud up 34% and both search and YouTube delivering solid growth as new Gemini-powered features rolled out across the portfolio.

Profitability and cash flow help the story.

Alphabet’s earnings per share in Q3 increased more than 35% year over year, and Alphabet generated about $48.4 billion in cash from operations during the period, bringing the total for the first nine months of 2025 to more than $112 billion. Cash and marketable securities on the balance sheet sit around the $98.5 billion mark, and the company continues to return capital through share repurchases and a modest dividend while still funding heavy AI investment.

Like Tesla, Alphabet’s management expects its investments to rise from already high levels due to AI. Indeed, not only did management lift its full-year outlook for capital expenditures when it reported its third-quarter results, but it said it expects “a significant increase” in capital expenditures next year. Investments to support its AI-capable compute power for Google Cloud represent the primary driver for its capital expenditures.

The better bet for 2026 and beyond

Ultimately, the scale tips in favor of Alphabet for two primary reasons.

First, Alphabet’s business is more established than Tesla’s and is able to generate substantial profits — and do so on a more consistent basis.

More importantly, however, the Google parent has a much cheaper valuation than Tesla’s. Alphabet trades at 31 times earnings, and Tesla’s price-to-earnings ratio is just over 300. Even when looking at price relative to analysts’ consensus forecasts for earnings per share over the next 12 months (forward price-to-earnings), the chasm between the two remains massive. Alphabet trades at about 23 times forward earnings, and Tesla trades at close to 200 times forward earnings.

Sure, Tesla and Alphabet both hold significant promise when it comes to AI’s impact on their businesses next year (and beyond). Tesla’s upside rests on breakthroughs in full self-driving and robotics that could eventually reshape its economics. But the company is navigating a challenging environment in autos and a stock price valuation that is borderline egregious. Meanwhile, Alphabet faces its own risks, including regulatory scrutiny and the chance that its massive AI infrastructure doesn’t pay off as well as expected. Still, its combination of strong cash generation, a cash-rich balance sheet, and a much lower valuation multiple arguably makes it the more attractive way to participate in AI heading into 2026. 

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

The post Tesla vs. Alphabet: Which is the better AI stock for 2026? 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.

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Daniel Sparks and/or his clients have positions in Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet and Tesla. The Motley Fool Australia has recommended Alphabet. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.