For years, ASX healthcare shares have been the market’s rotten apple. Once viewed as a defensive safe haven, the sector became one of the ASX’s biggest laggards.

The S&P/ASX 200 Health Care Index (ASX: XHJ) is still down 33% over five years and 18% over the past 12 months. Between January 2025 and June 2026, the index lost more than half its value.

Then August happened. The ASX 200 Health Care index surged 13% over a month and now sits 44% above its June low, comfortably beating the S&P/ASX 200 Index (ASX: XJO), which gained 3% over the same period.

So, have ASX healthcare shares finally turned the corner?

CSL leads the charge

The sector entered August with expectations firmly beaten down. That proved to be a blessing.

Companies largely cleared the low bar, with cost control doing much of the heavy lifting. Healthcare was also the only sector where more companies upgraded their outlooks for the year ahead than downgraded them.

CSL Ltd (ASX: CSL) was the standout. Its shares jumped 40% in August after plasma product sales for the June half came in ahead of expectations.

More importantly, management pointed to improving gross margins at CSL Behring, the plasma business that has caused plenty of headaches in recent years. UBS now believes the worst could be behind CSL ahead of its CEO transition in 2027.

Other healthcare heavyweights also delivered. Ansell Ltd (ASX: ANN) jumped 23% after beating expectations, with its FY27 guidance implying double-digit earnings-per-share growth at the midpoint.

Ramsay Health Care Ltd (ASX: RHC) gained 16% after a better-than-expected FY26 result. Its new management team expects further margin expansion in FY27, helped by more predictable private health insurance agreements, better operating theatre utilisation and procurement savings.

The rally wasn’t limited to those three names. Eight of the sector’s 10 largest ASX healthcare shares finished August higher. Cochlear Ltd (ASX: COH) climbed 13%, Telix Pharmaceuticals Ltd (ASX: TLX) rose 10%, and ResMed Inc (ASX: RMD) gained close to 10%.

Can the rebound continue?

This is where things get interesting. August was impressive, but FY27 will be the real test.

Management teams are generally optimistic, yet analysts aren’t quite as convinced. According to a recent Macquarie note, consensus FY27 earnings forecasts for the sector were actually cut by more than 2% during August.

There’s another problem: valuations have rebounded alongside share prices. The bargain-basement appeal that existed at June’s lows has largely disappeared. Investors are now paying more for the turnaround they hope is coming.

The August reporting season suggests CSL and several of its peers may finally be back on firmer ground. But after such a powerful rebound, the easy part may already be over.

Now, ASX healthcare shares need to deliver.

The post CSL led the ASX healthcare shares rebound. Can it continue? 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 CSL, Cochlear, ResMed, and Telix Pharmaceuticals. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended Ansell, CSL, Cochlear, and Telix Pharmaceuticals. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Recently, investors have been searching for the optimal strategy to gain exposure to the artificial intelligence buildout. 

This has evolved from direct exposure through AI companies to the infrastructure that supports AI rather than in AI software itself.

The AI revolution and the ASX 

Because Australia has relatively few direct AI leaders comparable to Nvidia Corp (NASDAQ: NVDA) or Microsoft Corp (NASDAQ: MSFT), investors have focused on:

• Data-centre operators
• Electricity generators and infrastructure companies
• Mining companies with exposure to commodities needed to build and power data centres, particularly copper and uranium. 

ASX investors have also turned to thematic ASX ETFs that target these companies. 

Overall, the ASX AI investment strategy has increasingly become a “picks and shovels” approach: rather than trying to identify Australia’s next major AI software company, investors are targeting the physical infrastructure and resources needed to power and expand the global AI boom.

Adrad Holdings Ltd (ASX: AHL) has been identified as a potential beneficiary of the AI boom.

Company overview

Adrad is an Australian-based business specialising in the design, manufacture, importation and distribution of heat transfer solutions for the automotive and industrial markets in Australia, New Zealand and Southeast Asia.

Its stock price has risen over 50% year to date. 

Its strong rise in 2026 is closely connected to AI/data-centre infrastructure, but there is more to the story. AHL has exposure to the growing need for cooling systems for data centres, as well as mining, power generation and other heavy-industry applications.

Big upside for this ASX stock 

A fresh report from the team at Bell Potter suggests this ASX stock could be a long-term beneficiary of the AI boom. 

Bell Potter is increasingly positive on Adrad because of its exposure to the rapidly growing data-centre and AI infrastructure market. 

The company has responded to growing demand by doubling its Australian data-centre capacity and expanding manufacturing in Thailand, with the additional capacity already generating new customer orders. 

Bell Potter therefore expects this data-centre investment to support Adrad’s revenue and earnings growth over the medium term. 

While its FY27 forecasts remain unchanged, Bell Potter has upgraded its FY28 and FY29 expectations, increasing revenue forecasts by 3% and 5% and EPS forecasts by 9% and 13%, respectively. 

It now expects mid-to-high single-digit revenue growth and mid-to-high teens EPS growth in FY28 and FY29, respectively.

The broker has a buy recommendation on this ASX stock as well as an upgraded price target of $1.80 (previously $1.40). 

From yesterday’s closing price, this indicates approximately 14% upside. 

The post This ASX stock could be a surprise winner of the AI boom 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 Microsoft and Nvidia. The Motley Fool Australia has recommended Microsoft and Nvidia. 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) and Commonwealth Bank of Australia (ASX: CBA) shares have both lost ground over the past full year, while the S&P/ASX 200 Index (ASX: XJO) has gained 1.8%.

On Monday, Flight Centre shares were trading for $11.54 apiece. That sees shares in the ASX 200 travel stock down 6% over 12 months.

Though that doesn’t include the two fully-franked dividends totalling 42 cents a share Flight Centre paid eligible stockholders over this time. Flight Centre trades on a full-franked 3.6% dividend yield.

As for CommBank, shares in the ASX 200 bank stock were recently trading for $161.06 each. This sees the CBA share price down 4.3% over 12 months.

CBA also paid two fully-franked dividends over the past year, totalling $5.05 a share. CBA stock trades on a 3.1% fully-franked trailing dividend yield.

And looking ahead, Medallion Financial Group’s Stuart Bromley believes both big-name ASX 200 stocks are likely to keep underperforming in the upcoming months (courtesy of The Bull).

Here’s why.

Time to sell CBA shares?

“CBA remains Australia’s highest quality major bank,” Bromley said.

He noted:

The company posted cash net profit after tax of $10.982 billion in full year 2026, up 7 per cent on the prior corresponding period. The full year dividend of $5.05, fully franked, is up 4 per cent.

However, Bromley issued a sell recommendation on CBA shares.

He explained:

Despite the strong result, we believe the valuation is stretched, particularly as higher interest rates weigh on housing activity and credit growth. CBA shares were recently trading at historically elevated valuations compared to global peers. Better valuation opportunities exist elsewhere.

As for CBA’s passive income potential, Bromley concluded, “The recent dividend yield of 3.16 per cent lacks appeal.”

Which brings us back to…

Time to exit Flight Centre shares?

Atop his bearish outlook for CBA shares, Bromley also issued a sell recommendation on Flight Centre shares.

According to Bromley:

The global travel agency group delivered record total transaction volumes in full year 2026. However, underlying profit before tax of $278 million declined by 4 per cent as Middle East disruption weighed heavily on the leisure business.

We view geopolitical uncertainty, airline capacity constraints and softer consumer conditions as headwinds. We see better risk-adjusted opportunities elsewhere.

Commenting on the impact of the Iran war last month, Flight Centre CEO, Graham Turner said:

In Q4, the Middle East conflict disrupted travel patterns, That was an external shock, not a change in the leisure business’s underlying strength, and momentum is already returning, with July TTV at record levels for the month.

Flight Centre shares closed down 7.4% when the company reported those results on 26 August.

The post Sell alert! Why this expert is calling time on Flight Centre and CBA 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.