Companies driving AI boom lead US earnings growth and profitability

Wed, 05 Nov 2025 20:10:25 +0000

Billy Leung

The US technology giants represent some of the strongest growth and quality exposures in global equity markets, with their huge price gains underpinned by strong earnings growth and profitability, according to Global X senior investment strategist, Billy Leung, who says the artificial intelligence (AI) boom is just getting started.

“The US technology giants are exceptionally profitable, with robust margins, scalable business models and strong balance sheets, which could keep getting stronger. On 2026 estimates, Apple and Nvidia are forecast to deliver returns on equity (ROE) of around 175% and 90% in financial year 2025-26, respectively, while Meta, Alphabet, Microsoft and ServiceNow also sit comfortably above the S&P 500 average of roughly 20%,” Leung said, as the chart below highlights.

“Growth expectations tell a similar story. Over the next three years, earnings per share (EPS) for the broader FANG universe is projected to rise faster than the overall market, with chipmakers Nvidia and Broadcom expected to compound at around 35% to 40% a year, while EPS of Netflix, ServiceNow, Microsoft and Amazon forecast to grow in the high teens to low twenties. The group combine structural growth with consistent profitability, which remains rare in global equities,” Leung said.

“Smart Australian investors are buying into this boom, with assets under management (AUM) for Global X’s FANG+ ETF attracting near record inflows of $315 million this year and that is set to surpass total inflows of $349 million in 2024. With total AUM of $1.69 billion as at October 31, including the currency hedged ETF, FANG+ could soon surpass $2 billion in AUM as smart investors buy into the profitability of the US tech giants.

“By maintaining diversified exposure to the most profitable and strategically positioned names in technology, the FANG basket still offers an efficient way for Australian investors to stay invested in the next phase of digital transformation and the AI boom, which has propelled the growth of these US technology giants as they reap revenues unmatched in history,” Leung said.

“Nvidia is the first company ever to surpass US$5 trillion in market capitalisation and recently announced over US$500 billion in revenue from sales of its graphics processing units, which are essential to the processing of AI. Nvidia’s shares have rallied 77% for the six months to October 31^[1], unpinned by its huge profitability and earnings growth.

“Also last week, Apple’s market capitalisation rose above $4 trillion for the first time, and it overtook Microsoft, after announcing record revenue in the first quarter of FY 2025-26 of just over $1 billion, pushing it shares to a record high of US$277. Alphabet too announced AI-driven cloud boom pushed its quarterly revenue past US$100 billion for the first time. Its shares reached a fresh record high at US$291.59 and have rallied around 70% in six months.

“Global X believes that the AI boom still has more room to run. Hyperscalers’ capital investment has already risen more than 50% this year and is projected to rise again in 2026. That spending is still translating into stronger earnings for these technology giants and could do so for some time yet, so Australian investors could still have time to ride the boom,” said Leung.

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Notes:
[1] https://finance.yahoo.com/news/why-nvidia-nvda-stock-today-192046409.html

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Global X launches defence technology ETF amid surge in global defence spending

Wed, 09 Oct 2024 20:40:10 +0000

Billy Leung

Global X has launched the Global X Defence Tech ETF (ASX: DTEC), providing Australian investors with access to global companies at the forefront of defence innovation. As global security concerns shift focus onto technology-driven solutions, DTEC offers targeted exposure to key sectors driving the future of defence, including artificial intelligence (AI), drones and cybersecurity.

DTEC aims to track the performance of defence technology sectors by focusing on innovations in security, defence systems and hardware that enhance national safety. The fund maintains a competitive management fee of 0.50% per annum.

The fund has been available in the US under the ticker code SHLD and has gathered more than US$500 million in net assets since listing less than one year ago.^[1]

Investment Strategist, Billy Leung said DTEC’s launch comes at a critical juncture, as geopolitical uncertainty has heightened national security concerns and sparked global defence spending.

“As the global landscape evolves, modern defence planning has shifted towards safeguarding nations through a combination of technology-driven innovations and essential defence infrastructure to enhance protection, intelligence and security. DTEC offers investors access to the sectors leading this transformation, with global defence spending rising at an annualised rate of 4.3%^[2] over the past 40 years.

“We expect this trend to continue amid further geopolitical uncertainty, which is a testament to the sector’s resilience even during economic downturns.

“DTEC offers growth due to its differentiated exposure across various sectors, including industrials, cybersecurity, AI and augmented reality. What is key here is that unlike many civilian markets defence revenues are closely tied to military needs. This gives the defence sector a level of resilience and less correlation with general economic cycles, positioning DTEC as an attractive option for investors seeking capital growth,” Billy said.

DTEC expands Global X’s ETF lineup in Australia to 41 across core, thematics, commodities, income and cryptocurrency. Global X now holds more than $8 billion in assets under management in Australia and over US$85 billion globally.^[3]

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Notes:
[1] As of 30 September 2024.
[2] Stockholm International Peace Research Institute, US Department of State.
[3] As of September 2024.
[4] As of May 2024.
[5] As of March 2024.

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Companies driving AI boom lead US earnings growth and profitability

Notes: [1] https://finance.yahoo.com/news/why-nvidia-nvda-stock-today-192046409.html

Global X launches defence technology ETF amid surge in global defence spending

Notes: [1] As of 30 September 2024. [2] Stockholm International Peace Research Institute, US Department of State. [3] As of September 2024. [4] As of May 2024. [5] As of March 2024.

Notes:
[1] https://finance.yahoo.com/news/why-nvidia-nvda-stock-today-192046409.html

Notes:
[1] As of 30 September 2024.
[2] Stockholm International Peace Research Institute, US Department of State.
[3] As of September 2024.
[4] As of May 2024.
[5] As of March 2024.