The US know-how giants signify a few of the strongest development and high quality exposures in world fairness markets, with their big value beneficial properties underpinned by sturdy earnings development and profitability, based on International X Senior Funding Strategist, Billy Leung, who says the Synthetic Intelligence (AI) growth is simply getting began.
“The US know-how giants are exceptionally worthwhile, with sturdy margins, scalable enterprise fashions and powerful steadiness sheets, which might maintain getting stronger. On 2026 estimates, Apple and Nvidia are forecast to ship returns on fairness (ROE) of round 175% and 90% in monetary yr 2025-26, respectively, whereas Meta, Alphabet, Microsoft and ServiceNow additionally sit comfortably above the S&P 500 common of roughly 20%,” Leung mentioned, because the chart under highlights.
“Progress expectations inform an analogous story. Over the subsequent three years, earnings per share (EPS) for the broader FANG universe is projected to rise sooner than the general market, with chip makers Nvidia and Broadcom anticipated to compound at round 35% to 40% a yr, whereas EPS of Netflix, ServiceNow, Microsoft and Amazon forecast to develop within the excessive teenagers to low twenties. The group mix structural development with constant profitability, which stays uncommon in world equities,” Leung mentioned.
“Sensible Australian traders are shopping for into this growth, with property below administration (AUM) for International X’s FANG+ ETF attracting close to report inflows of $315 million this yr and that’s set to surpass whole inflows of $349 million in 2024. With whole AUM of $1.69 billion as at October 31, together with the forex hedged ETF, FANG+ might quickly surpass $2 billion in AUM as good traders purchase into the profitability of the US tech giants.
“By sustaining diversified publicity to probably the most worthwhile and strategically positioned names in know-how, the FANG basket nonetheless affords an environment friendly approach for Australian traders to remain invested within the subsequent section of digital transformation and the AI growth, which has propelled the expansion of those US know-how giants as they reap revenues unmatched in historical past,” Leung mentioned.
“Nvidia is the primary firm ever to surpass US$5 trillion in market capitalization and lately introduced over US$500 billion in income from gross sales of its graphics processing models, that are important to the processing of AI. Nvidia’s shares have rallied 77% for the six months to October 31, unpinned by its big profitability and earnings development.
“Additionally final week, Apple’s market capitalization rose above $4 trillion for the primary time, and it overtook Microsoft, after saying report income within the first quarter of FY 2025-26 of simply over $1 billion, pushing it shares to a report excessive of US$277. Alphabet too introduced AI-driven cloud growth pushed its quarterly income previous US$100 billion for the primary time. Its shares reached a contemporary report excessive at US$291.59 and have rallied round 70% in six months.
“International X believes that the AI growth nonetheless has extra room to run. Hyperscalers’ capital funding has already risen greater than 50% this yr and is projected to rise once more in 2026. That spending remains to be translating into stronger earnings for these know-how giants and will accomplish that for a while but, so Australian traders might nonetheless have time to trip the growth,” mentioned Leung.
