Here comes the AI plot twist. The artificial intelligence story dominated markets in 2025, but Australia’s top fund managers expect a new tech narrative to emerge in the next 12 months – and the easy wins might be done.
Armina Rosenberg, co-founder of Minotaur Capital, says that while the big gains in 2025 were concentrated in a handful of mega-cap companies, mainly operating in the infrastructure layer of the AI industry, next year’s winners will look different. First, she likes stocks that make the components that enable large-scale AI computing. Secondly, Rosenberg is tipping some apparent AI losers to make a comeback.
“Several high-quality businesses have de-rated sharply as sentiment swung from exuberance to indifference. In our view, the baby has been thrown out with the bathwater, and 2026 could mark a re-rating opportunity for select software names whose competitive moats and adaptability to AI are stronger than the market currently assumes.”
Raphael Lamm is also looking to the US. The co-founder and co-chief investment officer of L1 Capital says the US economy will be stronger than many suspect, “supported by a combination of expected interest rate cuts, tax reductions, deregulation, accelerated depreciation, onshoring, and a surge in AI-driven capital spending … We have a number of stocks in the portfolio that stand to benefit from that dynamic, including international infrastructure materials companies CRH and Heidelberg, as well as aluminium giant Alcoa – all of which are trading at attractive valuations.”
Last year, Lamm’s selection in Chanticleer’s list of New Year stock picks was gold miner Westgold, which ends 2025 up more than 115 per cent. This year, he likes a rocketship that he believes can keep rising.
As always, our picks were compiled with the help of fund managers who work with Future Generation, the philanthropy-focused investment firm that runs three strategies: the Future Generation Australia and Future Generation Global listed investment companies, and the unlisted investment trust, Future Generation Women. The three funds donate 1 per cent of their asset bases to charity each year and have now donated $100 million to our not-for-profit partners – five years ahead of the schedule originally set by Future Gen founder, Geoff Wilson.
Let’s dive into the picks.
Chris Prunty, QVG Capital: Generation Development Group and Zip Co
Small cap guru Prunty agrees the big theme to watch in 2026 is AI, but he’s looking for a shift from “the big spenders to the big earners. Which companies can monetise AI directly, reduce cost to serve and run materially leaner staffing models?” On the ASX, he’s looking at a local player and a global player. Prunty says Generation Development Group, led by former Olympian Grant Hackett, is “swimming in tailwinds as its investment bonds keep winning flows, its Lonsec research arm continues to expand, and its managed accounts business benefits from the advice sector’s shift to outsourced portfolio solutions. GDG should continue to broaden its lanes, add new revenue streams and dive into adjacent pools,” Prunty says with admirable commitment to swimming puns.
Prunty also likes Zip Co, the US-focused buy, now, pay later group. “The model’s appeal for shareholders lies in very high returns on capital and lower-than-assumed risk: loans are small, short in duration, and the book turns rapidly, keeping losses contained and capital needs light.” Most importantly, he says, operating discipline “is finally aligned to unit economics”.
Chanel Stuart-Findlay, Plato: AbbVie
US demographic projections show that, for the first time in history, adults aged 65 and over will outnumber children within the next decade, and Stuart-Findlay says the ageing of developed economies is a huge trend to watch next year. Best of all, healthcare stocks are relatively cheap. She likes US-listed biopharmaceutical company AbbVie, which is focused on immunology, oncology and neuroscience, targeting conditions such as arthritis, several blood cancers and Parkinson’s, all of which become more common as we age. The stock “stands out for its earnings visibility and offers a defensive hedge to more crowded parts of the market”.
Mark Holowesko, Holowesko Partners: Smurfit WestRock
Holowesko is an old-fashioned value investor, and his pick, US-listed paper packaging group Smurfit Westrock, is down about 30 per cent in the past 12 months. Holowesko says the company’s management is strong, and can deliver more synergies from the combination of working through the integration of WestRock and Smurfit Kappa last year more effectively than the market thinks, generating $US1.6 billion ($2.4 billion) in free cashflow in 2026 and reducing its debt burden greatly. “The business also has tailwinds from the continuous move away from plastic to paper-based packaging products,” Holowesko says.
James Rodda and Alison Savas, Antipodes: Capital One Financial
The pair believe the shift from AI enablers to AI adopters is only beginning, and winners can be found across most industries, and on good valuations. One is US group Capital One, which is the largest digital consumer bank in the US and the largest credit card issuer, with a more than 20 per cent share. Trading at just 8.5 times forward earnings, Rodda and Savas argue the company is well placed to use AI to “sharpen customer targeting, enhance risk management and drive efficiencies” and will also extract solid synergies from its recent acquisition of Discover Financial.
Oscar Oberg, WAM Capital: Autosports and Fineos
Small cap stocks enjoyed a big end to 2025 on the ASX, but Oberg says it was mainly smaller miners doing well, and his big trend for 2026 is a broadening of that small-cap trade. He says high-end car dealer Autosports can do well, as prestige European car brands recover and Chinese brands such as Geely, Zeekr and Polestar grow quickly. The company could also feature heavily in industry consolidation in the next 12 months, boosting earnings.
Oberg also likes Fineos, a tech company focused on the global life insurance market. The company is now profitable and generating positive free cashflow into 2026, with more growth and new contracts to come.
Armina Rosenberg, Minotaur Capital: SK Hynix and Radnet
Large-scale AI models require dramatically higher memory bandwidth and capacity, and Korean-listed group SK Hynix is one of only three global suppliers alongside Samsung and Micron. The stock is up more than 200 per cent in the last year, but Rosenberg argues that with “AI demand likely to remain strong and supply growth constrained, we believe the current pricing strength is more durable than the market expects”.
Her second pick is an AI beneficiary, US-listed diagnostic imaging group Radnet, which has plenty of cash on its balance sheet, very little debt and has been able to commercialise AI diagnostics through its DeepHealth platform.
Gabriel Radzyminski, Sandon Capital: QPM Energy
While Australia’s energy transition will continue to be debated, Radzyminski says the basic realities aren’t changing: “Demand keeps rising, the grid needs firming capacity, and reliable generation is increasingly valuable.” QPM plays to these trends: it owns the Moranbah gas fields with substantial uncontracted reserves, holds dispatch rights over the Moranbah and Townsville power stations, and is building the Isaac power station, which could help lift its earnings 10-fold by the 2028 financial year.
Raphael Lamm, L1 Capital: NexGen Energy
The ASX-listed miner NexGen Energy is L1’s big pick in the uranium sector. First, the company is benefiting from a resurgence in global nuclear energy driven by increased demand supported by government policy, the AI boom and tightening supply. But NexGen is also developing the Rook I project in Canada, which hosts the Arrow deposit, the largest undeveloped uranium deposit globally and a strategically important potential Western source of supply. Lamm says that at current uranium prices, NexGen trades on a highly attractive valuation: Rook I is capable of generating about $CAD2.8 billion ($3.1 billion) of EBITDA at $US80 a pound uranium, which implies a 3.5 times enterprise value to EBITDA multiple. By comparison Cameco, the largest Western producer of uranium, currently trades at about 28 times EV/ EBITDA.
Alan Pullen and Casey McLean, Magellan Financial Group: Amazon and Medtronic
The Magellan pair argue the big trend for 2026 is the return to quality stocks (with solid balance sheets, earnings, and cashflow) as the speculative exuberance of 2025 fades. They like eCommerce and cloud colossus Amazon, where they argue the giant cloud business Amazon Web Services is primed to benefit from the long runway for enterprise cloud transition and AI.
The healthcare sector should do well in any switch to quality and Magellan likes Medtronic, which specialises in cardiovascular disease, neurological and spinal conditions, and diabetes. This is a defensive stock targeting GDP-plus revenue growth, but Pullen and McLean argue defensives might be a nice place to be in the next 12 months.
Ben Griffiths, Eley-Griffiths: Sims Limited and Qoria
Griffiths says copper is the big theme to watch in 2026. Since 2021, around 57 copper related M&A deals have been consummated globally, and he expects more in the next year, as demand rises above supply. ASX-listed metal recycler Sims may be a way to play that trend, with better copper prices helping to lift scrap prices, and Sims e-waste business starting to come into its own.
He also likes Qoria, which used to be known as Family Zone and sells a cloud-based software program that allows parents to control what their kids see on the internet. Qoria is now a top-four player in the US, where management is hoping to lift its share from 17 per cent to 30 per cent. Griffiths says the company has room for acquisitions, and the 35 per cent slump in the share price since late October creates a good entry point for investors.
Annabelle Miller, ECP Asset Management: Raspberry Pi and Copart
Miller is looking to value picks on both sides of the Atlantic. Raspberry Pi, which makes controllers, sensors and other devices that can be found on the desks of engineers from the likes of Siemens to Tesla, has fallen 40 per cent in the last year, but Miller sees opportunity for the company to emerge as a low-cost disruptor in the microcontroller industry.
Copart, which runs car auctioning and sales services is similarly out of favour with investors, but Miller says it has a “quality growth franchise with an irreplicable infrastructure footprint” particularly in its non-insurance car yard sales business.
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