The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in A2 Milk. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Nanosonics, PolyNovo, and REA Group. The Motley Fool Australia has positions in and has recommended Nanosonics. The Motley Fool Australia has recommended A2 Milk, Jb Hi-Fi, Nine Entertainment, PolyNovo, and REA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Whilst the S&P/ASX 200 Index (ASX: XJO) spent all day in the green today before closing 4.4% higher, one ASX 200 stock has been sold off sharply.

ASX Ltd (ASX: ASX) shares took a significant hit, plummeting 8% to $58.14 at the close of trading.

This sharp decline follows the company’s investor forum held on Thursday, where it outlined its financial guidance for FY 2025. Investors appeared less than impressed with some of the projections. Here’s a look.

Why did this ASX 200 stock drop 8%?

At its investor forum, the company revealed that it expected its total expense growth rate to be between 6% and 9% for FY 2025. This comes on top of an anticipated 15% increase in FY 2024.

The primary driver for this cost escalation is ongoing investment in technology, including software licensing, equipment costs, and depreciation and amortisation.

Depreciation and amortisation are said to be ‘non-cash expenses’ in finance, related to business assets. While this is technically true – we don’t physically pay depreciation, for example – they do represent the implied cost of maintaining these assets. The ‘wear and tear’, so to speak.

ASX managing director and CEO Helen Lofthouse provided an update on the company’s five-year strategy, focusing on technology modernisation and regulatory commitments.

“Our five-year strategy builds on a high-quality portfolio of businesses that deliver resilient revenue performance throughout market cycles,” Lofthouse said.

She added that data demand and Australia’s pension system – the fifth largest in the world – were two structural tailwinds behind the ASX 200 stock.

But Lofthouse was less optimistic about the expenditure side. ASX is projecting an “expense growth rate” of 6–9%, which is not something many were expecting. She had this to say:

This growth is primarily driven by ongoing technology related costs related to Horizon One of our five year strategy including software licencing and equipment costs.

Operating expense growth is partially offset by the annualised saving of $11m as a result of the targeted restructure announced at our interim results in February, and the expected further reduction in one-off regulatory costs following the completion of special reports and other activities last year.

It’s also worth noting the ASX 200 stock is making strides with its CHESS replacement project, partnering with Tata Consultancy Services for a product-based solution.

What else did ASX mention?

Other highlights from the investor day include the launch of the first ASX corporate bond, raising $275 million, and exploratory work with the Clean Energy Regulator to develop an Australian Carbon Exchange.

However, these ambitious projects have come at a cost. The company forecasts capital expenditure for FY 2024 to be around $135 million, with FY 2025 technology capital expenditure expected to be between $160 million and $180 million.

These are up from $50 million in the second half of FY 2024. Lofthouse added:

[W]e expect our capex spend to remain elevated through to FY27 to support our technology roadmap, before starting to reduce beyond this period.

We also expect the average depreciation and amortisation schedule of seven to ten years for these major projects, once they go live.

How will this affect ASX shareholders?

The projected expense growth and capital expenditure might have caused concern among investors of this ASX 200 stock today, leading to today’s 8% drop in the share price. Despite this, the company plans to maintain a dividend payout ratio of 80% to 90% of underlying net profit after tax (NPAT).

ASX’s significant investment in technology and regulatory commitments are also crucial for its long-term strategy. Investors would be wise to keep a close eye on how these investments play out over the coming years.

The post Guess which ASX 200 stock crashed 8% on Thursday appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow 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.

Two well-known S&P/ASX 200 Index (ASX: XJO) shares were just upgraded by leading brokers.

Both stand to potentially benefit from the rapid advancement of artificial intelligence (AI). And both have already handed their shareholders some sizeable one-year gains.

Which ASX 200 shares are we talking about?

Read on!

(Broker data courtesy of The Australian.)

Two ASX 200 shares earning broker upgrades

The first ASX 200 share earning a broker upgrade is WiseTech Global Ltd (ASX: WTC).

Shares in the logistics software provider are up 2.3% at the time of writing, trading for $99.12 apiece. That sees shares in the tech stock up more than 24% in a year.

WiseTech shares also trade on a slender, fully franked dividend yield of 0.2%.

And Bell Potter foresees some modest further gains ahead.

The broker raised its price target for WiseTech by 8% to $100.00 a share.

WiseTech shares could get a boost during the final week of the month. On 24 June the company joins the acclaimed S&P/ASX 50 Index. That’s part of  the S&P Dow Jones Indices June quarterly rebalance.

Which brings us to the second ASX 200 share getting a broker upgrade today, Seek Ltd (ASX: SEK), which owns and operates Australia’s biggest online jobs classified website.

The Seek share price is up 3.0% at the time of writing, with shares trading for $23.51 apiece. That puts the Seek share price up 8% in a year.

Seek shares also trade on a fully franked trailing dividend yield of 1.8%.

And JP Morgan expects some sizeable potential gains over the year ahead.

The broker raised Seek to an overweight rating with a $26.50 share price target. That’s almost 13% above current levels.

Last week, 5 June, the ASX 200 share grabbed investors’ attention when management announced the company had entered into a binding agreement to sell 98.2% of its stake in OCC Mexico and all of its stake in Catho Online to Red Arbor Holding.

Seek will receive US$85 million (AU$128 million) for these assets. The company expects the transaction to be complete by the end of the month and intends to use the funds to pay down some debt.

The Seek share price closed up 4.9% on the day, despite the company forecasting a $15 million to $35 million net loss on sale after tax from the divestment.

That’s likely because the ASX 200 share reported it does not expect the sale of OCC Mexico and Catho Online will result in any material changes to its FY 2024 earnings guidance.

The post Why these 2 ASX 200 shares just scored broker upgrades appeared first on The Motley Fool Australia.

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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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 JPMorgan Chase and WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool Australia has recommended Seek. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Artificial intelligence (AI) is no longer just for tech behemoths — it’s sprinkling its magic dust across a myriad of industries, creating unexpected winners in the stock market.

Just as we need to eat to survive and function, advanced AI systems require substantial electricity to operate. From this background, the reliability of the electricity supply is increasingly highlighted as a critical vulnerability within the AI ecosystem.

One ASX-listed company that could benefit from this trend is IPD Group Ltd (ASX: IPG), a distributor of electronic and automation systems and solutions across Australia.

Could this under-the-radar ASX small-cap stock be the surprise superstar of the AI revolution? Let’s dive into the potential of IPD Group.

Power shortages

We often hear about semiconductor chip shortages driven by the AI boom and how it is benefitting the likes of Nvidia Corp, Taiwan Semiconductor Manufacturing Co Ltd, and equipment maker ASML Holding NV.

However, Tesla Inc (NASDAQ: TSLA) boss Elon Musk believes power shortages are likely to be the next wave ahead of us. In an interview in March 2024, as part of the Bosch Connected World conference, he said:

The constraints on AI compute are very predictable… A year ago, the shortage was chips, neural net chips. Then, it was very easy to predict that the next shortage will be voltage step-down transformers.

Then, the next shortage will be electricity. They won’t be able to find enough electricity to run all the chips. I think next year, you’ll see they just can’t find enough electricity to run all the chips.

To make things worse, the developed world is already suffering from an inadequate supply of electricity due to ever-increasing energy demand and a slow transition to environmentally friendly energy sources.

The Australian Energy Market Operator (AEMO) warned of the potential risk of blackouts in NSW and Victoria in its May 2024 report, as highlighted by The Australian.

How is IPD Group’s business going?

IPD Group — founded more than 70 years ago — specialises in distributing electrical and automation solutions in Australia. It leverages renowned global brands like ABB Ltd and General Electric Co.

Its services encompass power distribution, industrial control, renewable energy solutions, and testing. More recently, the company expanded into solar energy, aiming to become a one-stop shop for all photovoltaic (PV) system needs ranging from PV equipment and services through the acquisition of Addelec.

In May, IPD Group provided a bright outlook for FY24, as summarised by my colleague James.

The company expects to report earnings before interest, tax, depreciation, and amortisation (EBITDA) between $39 million and $39.5 million, implying a 42% growth from a year ago at the midpoint. These projections exclude costs from the acquisitions of EX engineering and CMI Operations.

IPD Group CEO Michael Sainsbury believes FY24 has been a transformative year for the company, including major acquisitions. He said:

It has been a transformative year for IPD with the completion of two strategic acquisitions, EX Engineering and CMI Operations.

Merging our Addelec and Gemtek businesses has significantly enhanced our EV infrastructure team and we are capitalising on the growth in the market by securing a number of major projects during the year, including the electrification of Australia’s largest bus depot.

How cheap is this ASX small-cap stock today?

The IPD Group share price dropped by approximately 20% from the 52-week high of $5.42 in February this year. As the chart below shows, the IPG Group share price has been hovering between $4 and $5 for the last 12 months after more than quadrupling since its initial public offering in December 2021.

IPD Group shares are trading at a price-to-earnings ratio of 21x based on its reported earnings for the last 12 months to December 2023.

I think IPD Group has the potential to benefit from anticipated power shortages caused by the ongoing AI revolution, as well as electric vehicles and green energy initiatives.

The post Is this ASX small-cap stock an overlooked beneficiary of the AI boom? appeared first on The Motley Fool Australia.

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Motley Fool contributor Kate Lee has positions in ASML and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ASML, Ipd Group, Nvidia, and Tesla. The Motley Fool Australia has positions in and has recommended Ipd Group. The Motley Fool Australia has recommended ASML and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This is a common question among homeowners, and according to Damien Klassen from Nucleus Wealth, the answer depends on your income level, age, and mortgage interest rates at the time of your decision.

In a blog, Klassen offers advice for people considering what’s best to do with a spare $10,000 in income.

Let’s look into his findings.

Superannuation or the home loan?

Let’s look at some obvious factors first.

The biggest benefit of using a spare $10,000 in income to pay down your home loan is the guaranteed annual interest savings. The downside is you’ll have to pay full tax on that income if you use it in this way.

The biggest benefit of contributing a spare $10,000 in income into superannuation is the substantial tax saving on the way in (as long as you’re under the concessional contributions cap) and the ongoing earnings on your investments (bearing in mind that investments sometimes result in losses, too).

Just to remind you, concessional superannuation contributions are taxed at 15%, which is lower than most individual income tax rates.

A case study…

Klassen has run the numbers using a fictitious case study of an Australian earning $100,000 per year.

They have a mortgage with an annual home loan interest rate of 6%. They also have a superannuation fund returning an average of 6% per year.

He looks at the different outcomes over a 10-year period of using that spare $10,000 to either pay down the home loan or bump up superannuation this year.

Here’s what he finds:

At $100k, your marginal tax rate (in 2025) is 30% + Medicare levy = 32%.

So, your $10k becomes $6,800 off your mortgage after tax or $8,500 invested in super. i.e., you are $1,700 better off on day 1 in super.

If you save 6% on your $6,800 mortgage reduction over 10 years = $5,378 in interest avoided, tax-free.

If you made 6% in your $8,500 in superannuation and then paid tax on it = $5,155 after tax = $223 worse off in superannuation.

Net effect = $1,477 better off in super.

Klassen emphasises that the outcomes can be different depending on income levels and interest rates.

He says higher interest rates make using the money to pay off your home loan more attractive. Conversely, lower interest rates may make investing the money into superannuation a better option.

Klassen says people on higher incomes will “almost always” come out in front by contributing to superannuation.

Those earning less than $50,000 would likely be worse off if they put their spare $10,000 into superannuation vs. paying down their property loan, he says.

A few caveats…

While putting money into superannuation makes sense for a lot of people, they generally can’t access the funds until they reach preservation age.

Klassen says having inaccessible savings helps some Australians keep their spending in check.

However, there is some risk involved because once your superannuation money is invested, there is no guarantee of positive returns every year.

Klassen comments:

Investment returns within super can fluctuate with market conditions.

While younger individuals have time to recover from downturns, older individuals, such as those around 65, face more immediate risks.

The post Should you pay down your mortgage or add to superannuation? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen 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.

Nvidia‘s (NASDAQ: NVDA) performance has been nothing short of remarkable of late. I’m talking about Nvidia the stock and Nvidia the company. The stock’s performance speaks for itself. Shares have exploded higher by about 725% since January 2023. 

But that surge in price wasn’t just driven by overexuberant investors. Nvidia’s business itself has exploded — and its data center business, in particular. Revenue from that segment has more than quintupled in the past year, helping to drive Nvidia’s net income up by more than 600%. Growth from sales of the company’s artificial intelligence (AI) chips to data centers hasn’t yet peaked, but there are already indications of what could drive Nvidia stock’s next big move higher.

Explosive growth in data center sales

Nvidia’s recent good fortune didn’t come by chance. Many years of research and development allowed it to create the most technologically advanced graphics processing units (GPUs) in the industry, and have them available for customers just when the need for that type of computing power skyrocketed. Now, even as it works to accelerate its manufacturing to catch up with current demand, Nvidia already has its next-generation Blackwell chip series in production.

Beyond that, CEO Jensen Huang has also unveiled a new AI chip that it intends to bring to market in 2026. The Rubin platform will succeed the Blackwell, and will include GPUs as well as a new central processing unit (CPU). That will offer customers a more complete data center server system. The already-massive volume of data center spending is reflected in Nvidia’s quarterly segment revenue.

Data source: Nvidia.

But while data center revenue has gone parabolic, another Nvidia business segment is operating under investors’ radar right now. After all, it wasn’t just Nvidia’s R&D advancements that led to the growing uses of generative AI and other artificial intelligence applications.

There are now multiple companies that are working to put self-driving cars on the road or use computing power to improve existing vehicles’ performance. And there are signs that Nvidia’s automotive business could be its next big revenue driver.

Nvidia’s next major catalyst

While its auto segment numbers pale in comparison to data center sales right now, there’s a trending increase in revenue there as well. Sales growth is already coming as automakers work to improve their vehicles’ performance. Electric vehicle (EV) maker Rivian Automotive just announced it would be using Nvidia chips to enhance computing power and improve the range and performance of its R1 platform vehicles.

Data source: Nvidia.

Rivian says it will have 10 times more computing power using Nvidia’s DRIVE Orin processors. Nvidia calls its Orin system on a chip the central computer for intelligent vehicles. Other automotive companies partnering with Nvidia include Chinese EV makers BYD, Nio, and XPeng. In addition, Volvo, its subsidiary Polestar, and Mercedes-Benz are among the global automakers that use Nvidia’s autonomous driving system.

Self-driving cars could be Nvidia’s next bonanza

That helps explain the recent sales growth for Nvidia’s automotive segment. However, consider what might come next as more and more self-driving vehicles are being launched. Much attention is given to Tesla and its plans for robotaxi fleets. It has said it will update investors in August on the progress of its self-driving vehicle efforts. But other companies are a step ahead of the EV leader in autonomous driving, and already have vehicles on the road.

Alphabet‘s Waymo is expanding its operations as it trains its systems. In May, the company said it was performing 50,000 rides per week in San Francisco, Los Angeles, and Phoenix. Amazon owns self-driving car company Zoox, and it has plans to test vehicles in Austin and Miami.

To be sure, regulatory hurdles remain, and data will be needed to prove that the technology is safe and advantageous for consumers. But investors who can be patient for that data collection and process to play out could do well by being in Nvidia stock before that sector takes off. 

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

The post Prediction: This will be Nvidia’s next big move appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Howard Smith has positions in Alphabet, Amazon, BYD Company, Nio, Nvidia, Rivian Automotive, Tesla, and XPeng. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, BYD Company, Nio, Nvidia, and Tesla. The Motley Fool Australia has recommended Alphabet, Amazon, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.