Gaming is a booming business. Aristocrat Leisure Ltd (ASX: ALL) and Light & Wonder Inc (ASX: LNW) shares both benefit significantly from continued growth, particularly in the US casino industry.  

In the past month, Aristocrat’s share price gained over 9%, while rival Light & Wonder went 24% higher.

Bright long-term outlook

Macquarie Group Ltd (ASX: MQG) just released its report on North America iGaming revenue trends. The broker reports that gaming revenues in the US & Canada were around US$3.3 billion in the September quarter, 30% higher than in the same quarter the year before.

Analysts of the broker paint an even brighter long-term outlook:

We expect North American iGaming volumes to exceed US$18bn by 2030 without assuming any new jurisdictional openings, which is a +80% uplift from 2024 (US$10.1bn).

Duopoly in slot machines

Light & Wonder and Aristocrat Leisure have a duopoly in the slot machine sector. As a result, they are well-positioned to take advantage of the growing US market.

Aristocrat, which has a market value of $36 billion, is a global leader in the poker machine field. Light & Wonder has a smaller global footprint and market cap ($11 billion), but is more diversified across physical, digital, and online casinos.  

And the winner is?

Macquarie has an outperform rating on the two gaming stocks, both listed on the S&P/ASX 100 Index (ASX: XTO).  

The broker has a target price of $75 for Aristocrat shares, representing a potential 27% upside at the time of writing.

The broker notes:

Aristocrat can continue to win market share supported by industry leading design & development spend, which is seen as offensive and defensive, and supports content and hardware commercialisation across the three channels (land based, social casino and iGaming). Legalisation of iGaming and iLottery expands Aristocrat’s TAM, and trajectory to generate US$1bn Interactive revenues in FY29,

For Light & Wonder shares, Macquarie has maintained its $170 target price. That’s a potential 21% upside for investors over the next 12 months.

In its recent note, Macquarie lists a court case between Aristocrat and Light & Wonder as a company risk for the latter. Light & Wonder has been taken to court by Aristocrat over the development of the Dragon Train game. Aristocrat has alleged that, amongst other things, it infringes its intellectual property.

A recent court ruling granted Aristocrat the right to “obtain discovery of math models” from Light & Wonder. Macquarie qualifies this as a ‘downside’ in its report.

Litigation with Aristocrat is ongoing and likely not be resolved until either an out of jury settlement (likely 1H26) or a jury decision (likely 2H26).

The post Which gaming share does Macquarie prefer: Aristocrat Leisure or Light & Wonder? appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther 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 Light & Wonder Inc and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Light & Wonder Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Flight Centre Travel Group Ltd (ASX: FLT) shares are enjoying a welcome day of outperformance.

Shares in the S&P/ASX 200 Index (ASX: XJO) travel stock closed yesterday trading for $12. In early afternoon trade on Friday, shares are changing hands for $12.03 apiece, up 0.3%.

For some context, the ASX 200 is down 1.4% at this same time, following heavy selling in US stock markets overnight.

Longer term, Flight Centre shares have lagged the benchmark index, down 29% in a year compared to the 1.3% 12-month gains delivered by the ASX 200.

Though that’s not including the 40 cents per share in fully franked dividends the travel company paid eligible stockholders over the full year. At the current price, this sees Flight Centre stock trading on a fully franked trailing dividend yield of 3.3%.

And looking to the months ahead, Matthew Nicholas, deputy portfolio manager of 1851 Capital’s emerging companies fund, expects a much stronger performance from the stock (courtesy of The Australian Financial Review).

Flight Centre shares tipped for material turnaround

Asked which stock his fund owns that he believes has the most near-term upside, Nicholas pointed to Flight Centre shares.

“Flight Centre is a standout to us,” he said. “It’s trading near its COVID-19 lows from 2020, compared to the Small Ords, which have more than doubled over the same timeframe.”

Nicholas noted, “The stock trades on 12 times PE, is virtually debt-free and yet is the seventh most shorted stock on the ASX.”

Indeed, Flight Centre shares kicked off the week with a short interest of 11%. But according to Nicholas, traders betting against the ASX 200 travel stock could be about to get burned.

He said:

The business has faced a litany of headwinds in the past five years from pandemics to soft consumer confidence. Whilst the leisure business has borne the brunt of these challenges, in the background Flight Centre has grown what’s now a very robust corporate travel business and the key earnings driver of the group.

We see a combination of new contract wins in the corporate business and easing macro headwinds for the leisure division driving earnings across the group.

Nicholas concluded, “Importantly, market expectations are very low, which is always a good ingredient for outperformance.”

What’s the latest from the ASX 200 travel stock?

The last price-sensitive news for Flight Centre shares was released on 12 November.

The trading update came during the company’s annual general meeting (AGM).

Among the core financial metrics grabbing ASX investor interest, management forecasts FY 2026 underlying profit before tax will be in the range of $305 million to $340 million. That’s 5.5% to 17.6% above FY 2024 profit levels.

“FY26 is off to a positive start, with first-quarter results and preliminary October trading data confirming momentum across both corporate and leisure segments,” Flight Centre’s managing director Graham Turner said at the AGM.

The post Why this leading fundie forecasts a big uplift for Flight Centre shares 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 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.

Shares in DroneShield Ltd (ASX: DRO) have spent another day deep in the red after the technology company abruptly cancelled an investor call scheduled for Friday.

The stock fell as much as 12.2% to $1.66 on Friday before recovering to be changing hands for $1.74, down 7.8%, and well below the close last Friday of $2.33.

The shares are now trading at levels last seen in June, after hitting a high of $6.70 in October on strong news flow from the anti-drone technology company.

News flow turns sour

But the news in recent weeks has arguably been bad, confusing, and negative, with the company releasing a statement about contract wins which had already been released to the market, followed by the news that three of its directors had sold $70 million worth of shares. The company also this week announced its US Chief Executive was leaving the company.

The Australian Financial Review reported on Friday that Bell Potter, which the AFR pointed out had helped DroneShield raise $220 million last year, had organised a broker call, asking investors on Thursday to submit questions ahead of time.

The call was then cancelled on Friday morning, the AFR said.

Shares sales explained

DroneShield published a lengthy explanation to the ASX on Thursday regarding the share sales by its directors, which included Chief Executive Officer Oleg Vornik selling down a 14.81 million share stake.   

The company said that on 4 November, the vesting conditions for more than 44.4 million options had been met, and on 5 November, 31.2 million of these options were exercised.

The company said that investors in the company could have foreseen the share sales.

As it said:

The market was fully informed that the three directors had exercised performance options and were able to sell the DroneShield shares received on exercise. It is DroneShield’s belief that persons who commonly invest in securities would understand that the exercise of the performance options would crystallise the sale of a material proportion of the shares issued in order to meet the tax liability for each of the three directors and other employees arising from the exercise.

The company said it was not aware of any agreement between the three directors to sell their shares at the same time.

The company added:

DroneShield has been informed by the directors that they did not have an agreement to dispose of all (or any part) of their DroneShield shares, and that the shares were sold on-market, in the ordinary course of trading, and in accordance with programmed trading parameters agreed by each director with their broker.

DroneShield’s market capitalisation has fallen from a level greater than $6 billion last month to $1.71 billion at the close of trade on Thursday.

The post DroneShield shares tank again as investor call abruptly cancelled appeared first on The Motley Fool Australia.

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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 positions in and has recommended DroneShield. 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.

I have long written about my love of Washington H. Soul Pattinson and Co Ltd (ASX: SOL), or Soul Patts for short, shares, and how this ASX 200 investing house is one of my largest ASX investments. 

Soul Patts is a rather unique company in that it functions more as an investment vehicle than a traditional business that sells goods or services. It owns and manages a vast underlying portfolio of investments on behalf of its shareholders. These investments range from strategic and broad-based stakes in a range of other ASX shares to private equity and property assets.

The company has a formidable track record when it comes to these investments, with long-term shareholders enjoying market-beating returns for many years.

An important component of those returns is the dividends that Soul Patts has paid out. This company has the best income track record on the ASX, bar none, delivering an annual dividend pay rise every single year since 1998. 

As such, you can understand the love I have for this company as an investment, and why it is one of my largest ASX positions.

Despite this love, I haven’t made any major investments in the company for about two years, disregarding some small top-ups earlier this year.

Even so, I was thrilled to make a large purchase of Soul Patts stock back in late 2023, at a price of just under $32 a share. Given the company has been as high as $45.14 a share (hit in September 2025), this has fortunately paid off quite well so far.

Are Soul Patts shares a buy today?

Today, however, the company is well off that record high. In fact, it has taken quite the tumble since early September. At the current price of $36.57 (at the time of writing), Soul Patts is down about 18% from that high watermark from just ten weeks ago. 

So does that make the company a buy?

Well, Soul Patts is certainly a lot cheaper than it was back in September. However, I don’t think it’s really cheap just yet. This company attracted a rush of new buyers and investor optimism when it announced the plans to merge with Brickworks back in early June.

The merger went off without a hitch in September, but ever since, the air has been coming out of the brief share price inflation that the merger seemed to spark.

So yes, Soul Patts shares are down 18% from their September peak, but they are still above where they were back in May.

For me to pick up more shares, the company would have to get to at least $35.50, but probably a bit lower. That would put Soul Patts’ dividend yield, by my calculations anyway, above its long-term average. I’ve got my fingers crossed that this company’s shares keep on dropping accordingly.

The post I’m thrilled I bought Soul Patts shares 2 years ago. Would I buy them today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. 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 down 1.37% on Friday at 8,435.6 points, which is 7.5% off the record high set last month.

Despite the drop, Blackwattle Investment Partners says the ASX 200 is still expensive.

The ASX 200 is trading on a 21x forward price-to-earnings (P/E) ratio compared to its 10-year average of about 16x.

Excitement over the artificial intelligence (AI) revolution has certainly helped drive up global markets this year, including the ASX 200.

Are we headed for bubble trouble?

Is AI a bubble?

At the time of writing, the market is down 2.3% this week due to worldwide concern over high technology valuations and continuing economic uncertainty, particularly in the US, where speculation on the next move with interest rates changes daily.

This uncertainty hit ASX 200 tech stocks hard this week, with the sector down 3.62%. Financials are also down 2.85% so far this week.

Some investors feel worried that the hype around AI is creating a bubble.

US tech stock valuations remain very high, and just a few companies comprise a very large portion of the S&P 500 Index (SP: .INX).

Investors are worried about how much money the big tech giants are spending on AI, and whether this investment will truly bear fruit.

Outside the tech sector, many businesses are investing in AI to raise productivity, but we’re yet to see this translate to earnings growth.

It’s simply too early in the AI revolution for productivity gains in non-tech businesses to show up in their financials.

AI revolution versus dot-com bust

Many analysts and investors have acute memories of the dot-com bust in the early 2000s.

The Nasdaq Composite Index (NASDAQ: .IXIC) crumbled 60% over two years after hitting its peak in March 2000.

That is a shivers-up-your-spine market collapse that no investor wants to risk going through again.

However, many analysts say things with AI are very different to the market dynamics that produced the dot-com crash.

They point out that the major US tech companies leading the AI revolution are well-established, well-run businesses, whereas many company failures during the dot-com bust were start-ups that did not effectively harness the internet to grow profitable businesses.

The US tech giants also have substantial cash reserves, which means they do not have to rely on debt to fund their massive AI investments.

The world’s largest investment asset manager, BlackRock says:

In our view, parallels to the dot-com bubble fall short: tech earnings quality and capital efficiency are stronger today…

And unlike the dot-com era, robust earnings support today’s mega-cap valuations.

This week, the latest quarterly report from AI chip giant Nvidia Corp (NASDAQ: NVDA) was seen as a litmus test for how the AI revolution is tracking.

A positive report would reassure the market, while a disappointing one would enhance fears of a bubble.

Here’s what happened.

Nvidia delivers record revenue

Investors’ nerves were settled after Nvidia announced another quarterly revenue record.

Nvidia achieved $57 billion in sales, up 62% on the prior corresponding period.

The company’s gross margin was a staggering 73.4%. Net income of $31.9 billion represented a 65% increase on last year.

Nvidia CEO Jensen Huang said:

The AI ecosystem is scaling fast — with more new foundation model makers, more AI start-ups, across more industries, and in more countries.

AI is going everywhere, doing everything, all at once.

Joe Koh and Elan Miller, portfolio managers of Blackwattle’s Large Cap Quality Fund, said their clients were constantly asking about AI.

In their latest update, the managers said:

Some commentators have suggested that the high valuation multiples seen in equity markets such as Australia’s can be justified by the emerging benefits of AI.

And speaking to the management teams of many listed companies, there is reason to be optimistic about the potential for AI efficiencies.

However, history would suggest that it’s not the extent of efficiencies that matter to shareholders, as much as the ability of companies to retain those benefits rather than passing them on to their customers.

Koh and Miller point to the airline industry as a case in point:

… despite huge advances in aviation technology over the last few decades, the returns of many airlines have been below their cost of capital.

The benefits essentially accrued to travellers in the form of lower airfares, rather than to shareholders…

The managers said higher-quality companies would likely benefit disproportionately from AI compared to poorer-quality businesses.

They explained:

… stronger market positions enable them to retain more of the benefits for shareholders, rather than passing it all on to customers; better data from superior systems, scale or history enable better AI training; and better capacity (financial or human) enables faster, smoother or more reliable AI implementation.

As always, quality wins out in the end (even if it has a rough month or two).

Eric Sheridan from Goldman Sachs Research does not think there’s an AI bubble.

He says the Magnificent 7 companies are still generating large free cash flows, conducting buybacks, and paying dividends.

The post Does the AI revolution justify today’s high ASX 200 valuation? 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 positions in and has recommended Goldman Sachs Group and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended BlackRock. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

With only two hours of trade left before Friday’s closing bell, the S&P/ASX 200 Index (ASX: XJO) is down 2.4% for the week despite the best lifting efforts of these three ASX 200 stocks.

Which outperforming companies am I talking about?

Read on!

ASX 200 stocks leaping higher despite this week’s headwinds

Forget the potential of a looming AI stock market bubble. Or the fact that interest rates in Australia and the United States may not get any lower in the near or even medium term.

That’s certainly the attitude of investors who’ve been piling into global pathology provider Sonic Healthcare Ltd (ASX: SHL) over the week.

The ASX 200 stock closed last Friday trading for $21.32. At the time of writing, shares are changing hands for $23.30 apiece. That sees the Sonic Healthcare share price up 9.3% for the week.

Sonic Healthcare shares closed up 6.8% on Thursday amid the company’s annual general meeting (AGM).

Investors reacted positively after management reaffirmed the company’s FY 2026 earnings before interest, taxes, depreciation and amortisation (EBITDA) guidance to be in the range of $1.87 billion to $1.95 billion (on a constant currency basis).

At the higher end, that would represent 12.7% year-on-year earnings growth from the $1.73 billion EBITDA reported for FY 2025.

Sonic Healthcare also highlighted that year to date in FY 2026, statutory revenue is up 17% from the same period the prior year.

Moving on to the second ASX 200 stock marching higher despite the wider market malaise this week, we have property investment and funds manager Charter Hall Group (ASX: CHC).

Charter Hall shares closed last week trading for $21.86. At the time of writing, shares are changing hands for $24.11 each. That sees the Charter Hall share price up 10.3% over the week.

Charter Hall also held its AGM on Thursday, with shares closing up 6.7% on the day.

Investors bid up the stock after the company upgraded guidance for full-year FY 2026 earnings per security (OEPS) to 95 cents. That’s 5.6% above prior guidance of 90 cents per share.

Management credited the stronger earnings outlook to strong investment activity as well as increased revenue across core businesses.

Which brings us to…

Leading the pack this week

The top performing ASX 200 stock on my list for the week is asset management company GQG Partners Inc (ASX: GQG).

GQG Partners shares closed last week trading for $1.45 each. At the time of writing, shares are swapping hands for $1.63 apiece. This sees the GQG Partners share price up 12.4% in this week’s slumping market.

The last price-sensitive news out from the ASX 200 stock was its October funds under management update, released on 12 November.

With GQG Partners shares still down more than 23% in 12 months, it looks like investors may be doing some bargain hunting this week.

The post 3 ASX 200 stocks storming higher in this week’s sinking market 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 Gqg Partners and Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.