Most Australians would like to build a passive income stream. After all, what’s not to like about getting money without having to exchange time for it? There are many potential sources of passive income available to Australians. These include traditional assets like term deposits and investment properties. But also more exotic sources of secondary income, perhaps drop shipping or owning a vending machine.

However, I still believe that the simplest, easiest and most accessible source of passive income for the average Australian is buying ASX dividend shares.

Dividend shares tick every passive income box. Most importantly, they provide a reliable source of income that is truly passive – requiring minimal ongoing time and effort once purchased. That stands in contrast to other passive income investments like property, which tend to require regular ongoing maintenance.

But buying ASX dividend shares is also simple and accessible. Any adult can do so. The only wrinkle Australians might find with dividend investing is that it does require a large amount of initial investment to get any kind of worthwhile returns.

With that in mind, let’s talk about how to build a passive income stream with ASX dividend shares.

How can you get passive income from ASX dividend shares?

To start off with, you’ll need to pick an investment. Many people just stick with blue chip stocks like Commonwealth Bank of Australia (ASX: CBA), Woolworths Group Ltd (ASX: WOW), or Telstra Group Ltd (ASX: TLS). If you buy one of these companies’ shares, you are entitled to receive whatever dividends they declare, usually at a six-month interval. The current dividend yields on these shares are in a 2-4% range. That’s $2-4 per annum for every $100 invested.

Whenever I look at an ASX dividend share, I don’t just consider the upfront yield, though. It is also important to take into account how financially sound a company is. I also like to analyse a company’s dividend history and how fast it has grown its payouts. These factors, when put together, can paint a useful picture that shows us how likely a dividend share will become a compelling passive income investment.

It’s for this reason that two of my favourite passive income investments are Washington H. Soul Pattinson and Co Ltd (ASX: SOL), and MFF Capital Investments Ltd (ASX: MFF). Both of these companies have stellar track records of raising their dividends, which you can read more about here. Both companies have given me an annual dividend by rise every year I have owned them, and I love putting this passive income to use.

Fast-tracking your second income

So step one is finding the right ASX dividend shares and buying as many shares as you can afford. But doing this alone will take a long time to build up a meaningful passive income stream. Dropping $100,000 on a 4% yielding dividend share will only get you $4,000 a year in passive income, after all.

There are a couple of things you can do to get that passive income snowball rolling faster, though. The first is to buy more shares as often as you can. This is particularly impactful if you buy those shares during a share price slump or market downturn.

The second is by reinvesting any dividends you receive back into buying more shares. That pads out your snowball and can make a real difference to your wealth over time.

Buying ASX dividend shares won’t get you a huge stream of passive income straight away, unless you drop a huge amount of cash upfront. However, with time, patience, and compounding, it can be an incredibly effective way to build wealth as well as a source of secondary income.

The post How to build a passive income stream with ASX shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Mff Capital Investments and 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 Telstra Group, Washington H. Soul Pattinson and Company Limited, and Woolworths Group. The Motley Fool Australia has recommended Mff Capital Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Wesfarmers Ltd (ASX: WES) shares may be one of the most popular dividend options because of the company’s perceived stability and dividend yield.

The ASX retail share usually has a lower dividend yield than other ASX blue-chip shares, such as BHP Group Ltd (ASX: BHP), Westpac Banking Corp (ASX: WBC), and Telstra Group Ltd (ASX: TLS).

Wesfarmers has significantly increased its annual payout since the COVID-19 pandemic headwinds in 2020.

The FY26 half-year result was an example of the ASX retail share’s stability for shareholders and its ability to regularly increase its dividends.

In the HY26 result, Wesfarmers hiked its interim dividend per share by 7.4% to $1.02 after a 9.3% year-over-year increase of the underlying net profit after tax (NPAT) to $1.6 billion.

In this article, we’re going to look at the annual FY27 dividend, which will be paid in 2027.

2027 dividend projection for owners of Wesfarmers shares

According to CMC Invest’s projection, the ASX retail share is expected to pay an annual dividend per share of $2.20 in the 2027 financial year.

At the time of writing, this forecast translates into a dividend yield of 3% excluding franking credits and a grossed-up dividend yield of 4.3% including franking credits.

If someone were to invest $8,000 in Wesfarmers, they would be able to buy 110 Wesfarmers shares (with a little bit of money left over).

With those 110 Wesfarmers shares, investors could receive $242 of cash and $345.71 overall, including the franking credits.

Is this a good time to invest in the ASX retail share?

According to CMC Invest, there have been 7 analyst rating calls on the business in the last 3 months.

Of those seven, one of them was a sell, five of them were holds, and one was a buy. So, the investment professionals are largely neutral on the company’s valuation right now.

The average price target of those seven ratings is $76.64. That means, collectively, those analysts are predicting the Wesfarmers share price could rise by around 6% within the next year.

In February 2026, the Wesfarmers share price was almost as high as $90. But since then, it has fallen by close to 20%, making it much cheaper for investors to consider at a time when its key businesses (Kmart and Bunnings) could serve value-seeking customers well amid higher interest rates and stronger inflation.

For now, there seem to be more compelling ASX shares out there to buy.

The post If I invest $8,000 in Wesfarmers shares, how much passive income will I receive in 2027? appeared first on The Motley Fool Australia.

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• My simple investing strategy if I had to start over
• 3 ASX 200 shares I’d buy and hold through any market cycle
• How to build passive income with ASX shares in 3 easy steps
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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 positions in and has recommended Wesfarmers. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended BHP Group and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The idea of a stock market crash is never far from investors’ minds.

And to be fair, there are plenty of reasons to be cautious right now.

There is conflict in the Middle East, which has pushed fuel prices higher and added another layer of uncertainty to the global economy. Inflation has reaccelerated, and interest rates are expected to rise further in the coming months.

At the same time, investors are debating whether artificial intelligence (AI) has created a bubble in some parts of the market. There are also concerns about AI disruption, with investors trying to work out which companies will benefit and which could be left behind.

Closer to home, some mining shares have been trading at record highs, including BHP Group Ltd (ASX: BHP), PLS Group Ltd (ASX: PLS), and Rio Tinto Ltd (ASX: RIO). Consumer spending is also weakening as cost-of-living pressures weigh on households.

So, could the ASX crash before the end of 2026?

The ingredients are there

I think the ingredients for a meaningful pullback are clearly there.

Markets do not like uncertainty, and there is plenty of it around.

Higher interest rates can put pressure on share prices because they increase borrowing costs, reduce household spending power, and make cash and term deposits more attractive.

They can also hit growth shares particularly hard because investors become less willing to pay high prices for profits that may arrive further into the future.

Then there is the AI question.

AI could create enormous value over the long term, but the market may have already priced in a lot of optimism. If investors start to question spending levels, valuations, or the earnings benefits from AI, some high-growth shares could fall quickly.

Mining shares are another area to watch. Strong commodity prices have helped support companies such as BHP, PLS Group, and Rio Tinto. But when cyclical shares trade near record highs, expectations can become harder to meet.

If commodity prices pull back, China disappoints, or investors rotate away from resources, that part of the ASX could come under pressure.

But crashes are hard to predict

The problem is that predicting crashes is incredibly difficult.

The market can look expensive and keep rising. It can look risky and still push to new highs. It can also fall sharply for reasons investors did not see coming.

That is why I do not think most investors should build their strategy around trying to forecast the next crash.

A stock market crash before the end of 2026 is possible. I would not dismiss it. But I also would not sit entirely in cash waiting for it.

For long-term investors, I think the better approach is to keep investing periodically.

That might mean buying every month, every quarter, or whenever there is spare cash available. It can also mean keeping a watchlist of high-quality ASX shares and ETFs ready for periods of weakness.

If the market keeps rising, investors are still participating.

If the market falls, they can buy at better prices.

What I would do

I would carry on as normal.

That does not mean ignoring risk. I would make sure my portfolio is diversified, avoid taking on too much debt, and hold enough cash for short-term needs.

But I would keep buying quality assets over time.

For me, that could include broad ASX exposure, global ETFs, defensive dividend shares, and high-quality growth companies that have been sold down too heavily.

A market crash can be painful while it is happening. But history shows that the share market has recovered from every major crash and gone on to reach new highs.

I do not expect the next one to be any different.

Foolish Takeaway

There is a reasonable case that the ASX could suffer a sharp fall before the end of 2026.

Inflation, interest rates, geopolitical conflict, stretched valuations, AI concerns, and pressure on consumers are all real risks.

But trying to jump in and out of the market based on crash predictions can be more damaging than the crash itself.

My plan would be simple: keep investing gradually, focus on quality, and use any major weakness as an opportunity.

If a crash comes, it comes. I would rather be prepared to buy than paralysed by the fear of it.

The post What’s the likelihood of a stock market crash before the end of 2026? appeared first on The Motley Fool Australia.

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• How many Rio Tinto shares do I need to buy for $10,000 a year in passive income?

Motley Fool contributor Grace Alvino 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 BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Vanguard offers a number of exchange-traded funds (ETFs) on the ASX, and many of them are built around broad diversification.

But some investors may want something more targeted.

That is where the Vanguard Global Technology Index ETF (ASX: VTEK) could be worth a closer look.

This ETF gives investors exposure to some of the world’s most important technology companies. For anyone who believes technology will continue reshaping the global economy over the next decade, I think the VTEK ETF is one of the more interesting Vanguard ETFs on the ASX.

What does this Vanguard ETF own?

Its largest holdings include NVIDIA, Apple, Microsoft, Alphabet, Broadcom, Taiwan Semiconductor Manufacturing Co, Meta Platforms, ASML, and Tencent Holdings.

That is a powerful group of companies.

These businesses are exposed to some of the biggest long-term themes in the world, including artificial intelligence (AI), semiconductors, cloud computing, digital advertising, consumer technology, software, social media, and advanced manufacturing.

This essentially means the fund provides exposure to the companies building the tools, platforms, and infrastructure behind the modern digital economy.

Why I like this ETF

Technology is no longer a narrow part of the market.

It sits underneath almost everything. Businesses use cloud software to operate. Consumers use smartphones and apps every day. AI models need chips, data centres, and software. Digital advertising funds much of the internet. Semiconductor manufacturing supports everything from electric vehicles to defence systems.

This Vanguard ETF gives investors a simple way to access these trends without needing to choose a single winner.

That is important because technology investing can be difficult. Even great companies can have periods of weak performance. Valuations can rise too far. Competition can change quickly. Regulation can also become a bigger issue when companies become very large and powerful.

By owning a basket of global technology shares, investors can reduce the risk of relying too heavily on one company.

The AI angle

Artificial intelligence is probably the biggest reason many investors are looking at global technology ETFs right now.

The VTEK ETF has heavy exposure to companies that could benefit from AI adoption.

NVIDIA is central to AI chip demand. Microsoft is building AI into its software and cloud platform. Alphabet has deep AI expertise and a huge digital ecosystem. Broadcom and Taiwan Semiconductor Manufacturing are exposed to semiconductor infrastructure. Meta is using AI across advertising, content, and product development.

I think that makes this Vanguard ETF a useful option for investors who want AI exposure but do not want to bet everything on one stock.

Of course, AI enthusiasm can also create valuation risk. If expectations become too high, even strong businesses can disappoint investors in the short term.

That is why I would only buy this fund with a long-term mindset.

The risks

The VTEK ETF is not a defensive ETF.

Its holdings are concentrated in technology, and the top positions make up a large part of the portfolio. That can be positive when tech shares are rising, but it can work against investors when the sector sells off.

Higher interest rates, slower earnings growth, regulation, or a pullback in AI spending could all weigh on returns.

So, I would not use this fund as my entire portfolio. I think it works better as a growth-focused satellite holding alongside broader ETFs or other investments.

Foolish takeaway

I think the VTEK ETF could be one of the best Vanguard ETFs for investors wanting targeted exposure to global technology.

It owns many of the companies shaping the future of AI, software, semiconductors, cloud computing, and digital platforms.

There are risks, especially after strong runs from many large technology shares. But for long-term investors who can handle volatility, I think the Vanguard Global Technology Index ETF could be a smart way to invest in the next decade of innovation.

The post Is this one of the best Vanguard ETFs to buy now? appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino 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, Apple, Broadcom, Meta Platforms, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing, and Tencent. The Motley Fool Australia has recommended Alphabet, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Commonwealth Bank of Australia (ASX: CBA) shares just closed out a week to forget.

On Friday, shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed the day trading for $159.40. That saw shares in Australia’s biggest bank down a painful 9.39% over the week.

This week’s sell-down also put CBA stock in the red over the full year, down 6.09% in 12 months.

Though those losses will have been partly mitigated by the $4.95 in fully-franked dividends CommBank paid eligible stockholders over this time. CBA shares trade on a 3.11% fully franked trailing dividend yield.

Why did the ASX 200 bank stock crash this week?

CBA shares closed down 10.4% on Wednesday following the release of the ASX 200 bank’s March quarter results (Q3 FY 2026).

CBA reported an unaudited quarterly cash net profit after tax (NPAT) of around $2.7 billion. While that’s a tidy figure, Q3 profits were down 1% on CBA’s first-half cash quarterly NPAT average.

Then there’s the growing uncertainty facing Australia’s economy.

“Conflict in the Middle East is disrupting critical supply chains and contributing to global uncertainty,” CBA CEO Matt Comyn said.

With the potential for increasing bad loans ahead, Comyn added, “Notwithstanding an already strong level of provisioning, we have chosen to further top up our collective provisions in the quarter to reflect heightened macroeconomic risks.”

Do CBA shares have further to fall?

Filip Tortevski, senior analyst at Wealth Within, noted that Wednesday’s biggest-ever single-day fall in CBA shares “was blamed on the latest news release, but underneath the surface, something far more serious may be unfolding”.

He said that COVID had changed everything as far as how CommBank’s shares trade.

According to Tortevski:

Since 2020, CBA’s price action has looked less like a traditional bank and more like a momentum-driven tech stock, with an aggressive surge higher that has become increasingly disconnected from the way the stock historically traded.

Tortevski pointed to similar historical patterns that saw CBA shares get walloped.

He said:

Before CBA’s two major historical corrections, the 60% collapse during the GFC and the 44% decline between 2015 and the COVID low, the stock experienced a very similar acceleration phase in the years leading up to the falls.

And he believes the current situation closely resembles these two prior topping periods.

Tortevski concluded:

That’s why this may not be just another temporary sell-off. It could be the first serious warning that CBA is entering its next major correction cycle. If history rhymes, a move back toward $95 cannot be ruled out, which would imply another potential 50% decline from the highs.

Macquarie Group Ltd (ASX: MQG) analysts aren’t quite so bearish; however, the broker lowered its price target for CBA to $114 per share.

The post Down 9% this week, are CBA shares entering ‘a major correction cycle’? 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 positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

A $20,000 investment can go a long way in the ASX tech sector if it is spread carefully.

I would want a mix of businesses rather than three companies trying to win in the same corner of the market. That can help reduce reliance on one growth driver and give the portfolio exposure to different types of technology demand.

With that in mind, I would split $20,000 evenly across these three ASX tech shares that I think have attractive long-term prospects.

Catapult Sports Ltd (ASX: CAT)

Catapult Sports is the smallest and most niche of the three.

The company provides performance technology for sporting teams, leagues, and athletes. Its products help customers track movement, workload, training intensity, injury risk, and tactical performance.

This is a very different kind of technology company from the usual software names on the ASX. Catapult is tied to the professionalisation of sport.

Elite teams are always looking for small advantages. They want players fitter, better prepared, and less likely to break down. They also want better data to support coaching decisions, recruitment, and match analysis.

That gives Catapult a useful role inside an industry where performance data is becoming more important.

What I like is that the business can grow with its customers. Once a team builds its training and analysis around a platform, it can become part of the daily rhythm of the club.

Xero Ltd (ASX: XRO)

Xero is a much larger and more established business, but I still think it has room to compound.

Its cloud accounting software is used by small businesses, accountants, and bookkeepers across multiple markets. That gives it exposure to a very large customer base and a service that many businesses need every month.

I think about Xero as a small business operating system.

Accounting is the starting point, but the broader opportunity is helping small businesses manage more of their financial lives in one place. Invoicing, payments, payroll, tax, reporting, cash flow tools, and advisory services can all sit around the core platform.

That can make Xero more useful over time.

Small businesses often do not have large finance teams. They need software that saves time, reduces errors, and helps them make better decisions. If Xero can keep improving the product while expanding in large overseas markets, I think the business could be materially larger in a decade.

WiseTech Global Ltd (ASX: WTC)

WiseTech Global is the third ASX tech share I would buy with the $20,000.

Its CargoWise platform has a significant opportunity due to the growing complexity of global trade.

Moving goods around the world has become more complex. Companies are dealing with changing tariffs, shipping disruptions, customs rules, compliance requirements, and pressure to make supply chains more efficient.

That complexity can create demand for better logistics software.

WiseTech sits in a valuable part of the market because its customers need systems that help them run important workflows across borders. For freight forwarders and logistics providers, software is not just an administrative tool. It can affect customer service, compliance, speed, and profitability.

I believe this leaves WiseTech well-placed for growth over the next 10 years.

Foolish takeaway

I think Catapult Sports, Xero, and WiseTech offer three different ways to invest in ASX technology.

Catapult brings sports performance technology. Xero offers cloud software for small businesses. WiseTech provides exposure to the growing complexity of global trade.

All three shares could be volatile, and none is guaranteed to outperform. But if I were investing $20,000 into ASX tech shares with a long-term view, these are three names I would be happy to consider.

The post 3 ASX tech shares I’d buy with $20,000 appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino 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 Catapult Sports, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Catapult Sports, WiseTech Global, and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

While some ASX 200 shares are trading close to record highs, others have been left languishing.

The good news is that this means there’s potential for some big returns for investors over the next 12 months.

Let’s take a look at two ASX 200 shares that have been named as buys and are being tipped to rise around 20% or more from current levels. Here’s what brokers are recommending to clients:

Aristocrat Leisure Ltd (ASX: ALL)

Bell Potter thinks that gaming technology company Aristocrat Leisure could be an ASX 200 share to buy now.

It was pleased with its strong performance in the first half of FY 2026, highlighting that its profits were a touch ahead of consensus expectations.

Looking ahead, the broker believes the company is well-placed for growth thanks to its investment in research and development (R&D). It said:

We retain Buy. We expect ALL’s leading R&D investment will drive market share gains. Top 2 game performance observed in both the core sales and premium gaming ops markets leaves us confident that ALL can grow the install base >4.0k per year and grow global shipments. Further, with leverage expected to reach 0.4x despite significant buybacks, ALL has substantial capacity to boost growth inorganically.

Bell Potter has put a buy rating and $61.00 price target on Aristocrat Leisure’s shares. Based on its current share price, this implies potential upside of almost 20% for investors over the next 12 months. A 1.9% dividend yield is also expected from its shares.

Xero Ltd (ASX: XRO)

The team at Morgans is bullish on this cloud accounting platform provider.

It was impressed with its performance in FY 2026 and is feeling optimistic on its outlook. It said:

XRO reported a better-than-expected FY26 result and FY27 outlook. Earnings momentum continues to improve relative to consensus expectations. Management were confident enough to announce a buy-back and hint at potential capital management in FY28. However, investors didn’t take comfort with commentary around AI disruption risk versus reward.

Management has a plan to maximise the opportunity set (TAM) ahead of a path to AI monetisation. It’s early days in AI and the path to AI driven value creation will become clearer, over time. We retain our BUY recommendation and $111 Target Price.

Morgans has put a buy rating and $111.00 price target on the ASX 200 share. Based on its current share price of $79.67, this implies potential upside of approximately 40% over the next 12 months.

The post These ASX 200 shares could rise 20% to 40% appeared first on The Motley Fool Australia.

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

Looking to drill into Rio Tinto Ltd (ASX: RIO) shares for $10,000 a year in extra passive income?

You’re not alone!

The S&P/ASX 200 Index (ASX: XJO) mining giant has a lengthy track record of paying two fully franked dividends a year. And those franking credits should continue to offer investors potential tax benefits, even under the recently announced Federal budget measures.

Now, with Rio Tinto shares having rocketed more than 50% over the past year, the stock’s dividend yield has come down too.

But that doesn’t make it unattractive.

We’ll look at how many shares you’d need to buy for that welcome $10,000 annual passive income boost below.

But first a few important reminders.

Trailing yields and forecast yields

First, when you’re gauging a stock’s passive income potential you can look at trailing yields or forecast yields.

Forecast yields represent analysts’ best guesses at how much a company might pay out over the year or years ahead. But at the end of the day, these forecasts are just that. Guesses.

Trailing yields are based on the past 12 months of dividend payouts. Meaning future yields could be higher or lower depending on a range of company specific and macroeconomic factors.

For Rio Tinto shares, that includes the prevailing price of iron ore and copper, as well as weather conditions that could help or hinder mining operations.

Also bear in mind that, while we’ll look solely at Rio Tinto here, a properly diversified passive income portfolio will contain a lot more than just one dividend stock.

While there’s no magic number that fits everyone, 10 to 15 ASX dividend stocks is a good ballpark figure. Ideally these will operate in various sectors and locations. This will help reduce the risk of your income stream taking an outsized hit if any single stock or sector runs into a rough patch.

With that said…

Drilling into Rio Tinto shares for a $10,000 annual passive income

Rio Tinto paid a fully franked interim dividend of $2.22 a share on 25 September. The ASX 200 miner paid its final fully franked dividend of $3.671 a share on 16 April.

That works out to a full year dividend payout of $5.891 a share.

So, to aim for $10,000 a year in passive income (based on the trailing yield), you’d need to buy 1,698 Rio Tinto shares today.

How much would that cost?

Rio Tinto shares closed on Friday trading for $191.59 apiece, up more than 59% in 12 months.

To achieve your $10,000 annual passive income goal then, you’d need to invest $325,320 today.

Now, that’s a lot to invest in one go. But that’s okay. Investing is a long game. You can always invest smaller amounts on a regular basis, and you’ll reach your income goal in good time.

Rio Tinto shares trade on a 3.1% fully franked trailing dividend yield.

The post How many Rio Tinto shares do I need to buy for $10,000 a year in passive income? 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 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.

Interest in artificial intelligence continues to surge globally, but genuine ASX AI shares remain surprisingly rare.

That scarcity could create opportunities for investors willing to look beyond the market’s obvious winners. A handful of lesser-known ASX AI shares still offer the kind of catalysts, operating leverage, and re-rating potential that could drive outsized returns.

Here are two names increasingly catching investor attention.

Macquarie Technology Group Ltd (ASX: MAQ)

First up is Macquarie Technology. This ASX AI share is rapidly emerging as one of the clearest “picks and shovels” plays on the AI boom.

As artificial intelligence adoption accelerates, demand is exploding for data centres, cloud infrastructure, cyber security, and sovereign hosting solutions. These are exactly the areas where Macquarie Technology is investing aggressively.

In March, the company secured a $200 million hybrid investment from the government-backed National Reconstruction Fund Corporation.

The funding will help accelerate development of sovereign cyber security and cloud services and AI infrastructure for government agencies and defence and critical industries. Management plans to draw down the first $100 million by June 2026 and the second tranche by March 2027.

Unlike many speculative AI stocks, Macquarie Technology already generates meaningful earnings and has very visible demand drivers. The ASX AI share has now delivered 20 consecutive half-years of operating income growth, an impressive track record in any market environment.

As more data centre capacity comes online and utilisation rates rise, earnings could expand rapidly.

If the market begins valuing the company more like established data centre operator NextDC Ltd (ASX: NXT), investors could see significant upside from current levels.

Appen Ltd (ASX: APX)

Then there’s Appen. This is unquestionably the more speculative of the two ASX AI shares, but it may also carry the greatest upside potential.

Appen provides training data used by artificial intelligence models, placing it directly in the centre of the generative AI ecosystem.

After several difficult years, there are finally signs the business may be stabilising. For the March quarter, Appen reported revenue of $54.8 million, up 9% from the prior corresponding period. That marks an encouraging shift after a prolonged period of declining sales.

Profitability also improved. Underlying EBITDA came in at $1 million, compared to a $1.5 million loss a year earlier.

The strongest momentum is clearly coming from China. Revenue in the region surged 88% to $34.9 million, driven by growing demand tied to generative AI projects. The division exited the quarter with an annualised revenue run rate above $144 million.

Outside China, however, conditions remain challenging. The Appen Global segment saw revenue tumble 37% and posted an EBITDA loss of $3.1 million, reflecting the uneven nature of project-based work.

Even so, after the share price collapsed almost 90% over the past five years, expectations are now extremely low.

That creates an interesting setup. If demand for high-quality AI training data continues recovering or if Appen secures new strategic partnerships, even modest operational improvements could spark a sharp market re-rating.

The post These under-the-radar ASX AI shares are starting to turn heads 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 Appen. 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.

For beginners, I think one of the most useful investing lessons is also one of the simplest.

Compounding can do a huge amount of the work over time.

That does not mean every investment will succeed. Share prices will fall, sentiment will change, and even good companies will go through difficult periods. But owning high-quality businesses for long stretches can give investors a much better chance of building wealth steadily.

The three ASX 200 shares in this article all offer something I think beginners should look for: strong market positions, long growth runways, and business models that can become more valuable over time.

Hub24 Ltd (ASX: HUB)

Hub24 is a financial technology business that plays an important role in the wealth management industry.

Its investment platform is used by financial advisers and their clients to manage portfolios, reporting, administration, and investment access in one place.

I think this is a great example of a business benefiting from a long-term industry shift.

Financial advice is becoming more professional, more technology-driven, and more focused on efficiency. Advisers need platforms that help them serve clients well without being buried in administration. Clients also expect better visibility and smoother digital experiences.

Hub24 sits in the middle of that change.

What I like is that its growth is linked to funds flowing onto its platform. If it continues winning market share and attracting advisers, the business can keep expanding without needing to reinvent itself every few years.

There are risks. Market downturns can affect funds under administration, competition is strong, and valuation still needs to be considered. But I think Hub24 has the type of scalable model that can reward patient investors if it keeps executing.

For beginners, it offers exposure to the growing wealth management industry without needing to pick a bank or fund manager directly.

ResMed Inc. (ASX: RMD)

ResMed is one of the strongest healthcare businesses on the ASX in my view.

The company develops devices, masks, software, and connected care solutions for people with sleep apnoea and other breathing-related conditions.

I think the investment case starts with the size of the problem.

Sleep apnoea remains underdiagnosed around the world. Many people who could benefit from treatment either do not know they have it or have not yet entered the healthcare system. That creates a long runway for ResMed as awareness improves, testing becomes easier, and more patients begin therapy.

I also like that ResMed is not just selling a one-off product. Devices, masks, software, data, and patient support can all work together to create a more complete healthcare ecosystem.

The share price has been volatile, especially with investor debate around weight-loss drugs and their possible impact on sleep apnoea demand. But I think the bigger picture is still attractive.

Healthcare demand tends to be more durable than many parts of the economy, and ResMed has a global position in a large market that still has significant room to grow.

That makes it a share I think beginners could buy with a long-term mindset.

Goodman Group (ASX: GMG)

Goodman is another ASX 200 share I would consider for a beginner’s portfolio.

The company owns, develops, and manages high-quality industrial property. Its assets are used by customers involved in logistics, warehousing, ecommerce, and increasingly, data centres.

I think Goodman is interesting because it is tied to how the modern economy works behind the scenes.

Consumers expect faster deliveries. Businesses need efficient supply chains. Technology companies need more infrastructure to support cloud computing and artificial intelligence. Goodman provides the physical real estate that can support those trends.

The company has also built a strong reputation for capital discipline and development expertise. That is important because property investing can be risky when debt, interest rates, and development costs move against investors.

Goodman is not immune from those pressures. But I think its asset quality, global footprint, and exposure to structural demand give it a strong long-term position.

Foolish takeaway

Beginners do not need to look hard for shares to build wealth.

I think Hub24, ResMed, and Goodman are all high-quality ASX 200 businesses with clear growth drivers and strong positions in attractive markets.

They will not rise every year, and valuation still matters. But for investors who want to start with businesses that can compound over time, I think these three shares are well worth considering.

The post 3 high-quality ASX 200 shares for beginners to buy and hold appeared first on The Motley Fool Australia.

More reading

• With no savings at 50, I’d follow Warren Buffett’s approach to build wealth
• 3 ASX 200 shares I’d buy and hold through any market cycle
• Why are Resmed shares lagging if the business keeps compounding?
• Should you buy ResMed shares at their 52-week low?
• 3 ASX ETFs that could be top picks for beginners

Motley Fool contributor Grace Alvino has positions in Hub24. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group, Hub24, and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended Goodman Group and Hub24. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.