Rudi’s View: Trump’s Circus & Technology’s Brave New World

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This story features CAR GROUP LIMITED, and other companies.
For more info SHARE ANALYSIS: CAR
The company is included in ASX50, ASX100, ASX200, ASX300, ALL-ORDS and ALL-TECH

Underneath the Middle East quagmire, the world is changing and ASX technology stocks are at the centre of tomorrow's new landscape.

In this week's edition:

• Trump's Circus
• Technology's Brave New World
• Thoma Bravo & ASX Technology
• RBC Global's Top 30 Global Ideas

By Rudi Filapek-Vandyck, Editor

Trump’s Circus

One commentator put it as follows this week: We’re all on Trump’s rollercoaster and we can’t get off.

And so on Tuesday equities enjoyed a positive session, followed by a really strong session on Wednesday, but by Thursday all those gains had to be priced-out yet again.

What this week’s price action does signal is share markets are due for a big rally whenever a believable, permanent solution is reached between fighting opponents in the Middle East, but also: there will be no sustainable buying unless such an outcome is actually achieved.

Further complicating matters is the longer the current dead-lock continues, the worse the eventual outcome might be.

Right now, some forecasters are suggesting investors should start preparing for stagflation as energy supplies will remain disrupted for much longer, even if the war ends next week, but I think that’s not the real dilemma for investors to contemplate.

I think, once the situation clears in the Middle East (if/when), investors can most likely look through most of the shorter-term impacts, as long as the outlook remains biased towards improvement and relief.

That will not be the case if the outlook points to much lower, negative growth, as in the 1970s style of stagflation. That is currently not on the cards, but if the war continues for much longer, such an outcome will eventually pop up as the market’s biggest fear.

That’s when things will get very, very ugly. And quickly too.

Meanwhile, the world is changing and soon companies will start updating on affects and consequences from the war’s fall-out. Analysts will start downgrading their forecasts.

The two questions that right now remain unanswered are:

• How much deterioration should we prepare for?
• How much is already reflected in today’s share prices?

The honest response currently is: we do not know. What we do know is the longer the war continues, and energy supplies remain significantly disrupted, the heavier the impact will be, and probably also: the longer it may last.

By now, I assume you are all aware with the proverb: “When a clown moves into a palace, he doesn’t become a king. The palace becomes a circus.”

The modern day version of it has now become: “When clowns move into the White House, the world becomes a circus.”

It’s a closed-tent event. We will have to watch the spectacle until the end, whether we’d prefer otherwise doesn’t matter.

Technology’s Brave New World

While contemplating possible future ramifications of the current sh*tshow around the Strait of Hormuz, it is but logical our minds wander off to vulnerable retailers and business models linked to household budgets and spending constraints, but one extra factor that hasn’t disappeared is AI is still changing tomorrow’s world.

Well before the first bombs fell upon Iranian soil, investors, traders, hedge funds and shorters combined had turned the world of software and technology into a true graveyard of yesterday’s valuation premia and impregnable moats, alongside broken dreams and promises.

The global de-rating that started in the second half of last year has been one of the most savage ever witnessed outside of financial system calamity or economic recession.

All because of the possibility that rapid development of the AI technology can disrupt, if not annihilate, some businesses.

Which ones? We do not know. So we thrashed all of them.

On Thursday morning, sector analysts at Morgan Stanley took a stab at re-incorporating the new reality for yesterday’s star performing growth stocks on the ASX by slashing valuations by between -6% and -42%.

The average updated price target now sits -20% below consensus.

Underneath these changes sit lower growth projections for as far as the eye can see, on lower margins, with the need to invest more, and with reduced multiples to value future potential.

It’s not all bad news.

For starters: shares in companies such as Car Group ((CAR)), Pro Medicus ((PME)), REA Group ((REA)), TechnologyOne ((TNE)), WiseTech Global ((WTC)), and Xero ((XRO)) are trading well, well, well below revised targets.

I think the underlying message is loud and clear: the past is different from the future. Investors will have to distinguish between survivors and pretenders. Things that do not matter as much during rampant bull markets like the ones we experienced over the years prior to mid-2025.

Morgan Stanley offers the following guidelines:

1. Look for durable competitive moats
2. Which companies can pivot their R&D spending the quickest and launch new products significantly earlier than the competition?
3. Which management team understands the imperative to act decisively and with urgency?

Morgan Stanley’s highest conviction favourites are (in order of preference):

In large cap software:

• WiseTech Global
• Xero
• TechnologyOne

In mid-cap software:

• Hansen Technologies ((HSN))
• Catapult Sports ((CAT))

In internet marketplaces:

• REA Group
• Car Group

Equally noteworthy perhaps is the broker’s revised sector assessment comes with the following Equalweight ratings (equivalent of Neutral/Hold):

• Megaport ((MP1))
• Hipages ((HPG))

As well as the following Underweight ratings (‘Sell’-equivalents):

• Tyro Payments ((TYR))
• Airtasker ((ART))

The report concludes that for those companies who manage AI’s future well, there could be benefits to reap through even larger growth potential and new avenues.

Thoma Bravo & ASX Technology

Morgan Stanley might be the first in Australia in its well-thought out response to the global SaaS-pocalypse, internationally there have been many more of such attempts and ripostes to the elongated wave of indiscriminate selling for your average growth stock.

Chicago-based Thoma Bravo is a large US private equity firm specialised in such investments.

Thoma Bravo’s recent message to the world was the global software sell-off has been too indiscriminate, with public investors pricing much of the sector as if AI disruption were universal rather than separating vulnerable point solutions from durable, mission-critical platforms.

The suggestion made is not all software companies should be treated equally. Some businesses deserve to have their valuations cut; for others such de-rating seems unwarranted.

The read-through for listed software is that valuation support is likely to skew towards businesses with embedded workflows, recurring revenue, proprietary data and credible AI monetisation, while more replaceable applications remain exposed to structural de-rating.

The firm also sees the dislocation as a public-to-private opportunity, arguing AI-fear-driven selling has created a historic acquisition window.

I shared Thoma Bravo’s views with ChatGPT and asked for an ASX-focused interpretation:

My read-through for ASX software is that Thoma Bravo’s framework should favour the system-of-record, workflow-embedded, vertical SaaS names, not the market as a whole.  

The clearest local beneficiaries, in my view, are TechnologyOne, WiseTech Global and Pro Medicus. TechnologyOne is deeply vertical ERP, focused on six markets including education, government and health/community services, and reported FY25 ARR of $554.6m while also rolling out AI products such as Guide; that is close to the kind of sticky, mission-critical platform Thoma Bravo says markets are mispricing.

WiseTech’s CargoWise is described by the company as a deeply integrated global platform for logistics, and it is now layering in agentic AI-enabled workflow automation.

Pro Medicus looks similar in healthcare imaging: its AI accelerator is being built into diagnostic workflow, and customers are increasingly taking the fuller Visage stack rather than a single point tool.

The next rung of likely beneficiaries is Xero, Objective Corp ((OCL)), ReadyTech Holdings ((RDY)) and SiteMinder ((SDR)).

Xero already has the core accounting/payroll/payments platform and is pushing JAX as an agentic AI layer on top of existing workflows.

Objective and ReadyTech both fit the “trusted workflow + regulated end market” mould: Objective’s customer base is government-heavy, subscription revenue reached 84% in FY25, and it is adding AI into public-sector information management; ReadyTech explicitly pitches itself as mission-critical SaaS across education, workforce, government and justice, with “core system of record” positioning in those sectors.

SiteMinder also deserves mention because its hotel commerce platform is moving beyond channel management into a broader revenue platform, which gives it more workflow depth than a narrow point solution.

The harder sells under this framework are Bravura Solutions ((BVS)) and Nuix ((NXL)) not because they are poor businesses, but because I think public markets may keep demanding more proof.

Bravura is still clearly vertical and useful, but its FY25 revenue growth was modest and only $154.3m of $256.8m revenue was recurring, which leaves it looking less like a high-multiple compounding SaaS platform than the names above.

Nuix has real strengths and is embedding AI deeply in Neo, but its core value proposition sits closer to search, review, discovery and investigation workflows —exactly where AI can both enhance incumbents and narrow differentiation— so I suspect it stays in the “show me” bucket until the market sees cleaner evidence that AI is expanding, not compressing, its moat.

That last point is my inference from its product positioning and Thoma Bravo’s broader argument, rather than a management statement from Nuix itself.

RBC Global’s Top 30 Global Ideas

Within the above context it remains equally surprising WiseTech Global has been removed from RBC Capital’s Top 30 Global Ideas for 2026.

The joint co-heads of global research emphasise they remain of the view the de-rating of the sector, and of WiseTech shares in particular, has gone way too far, but as it turns out, this was not sufficient to keep this stock included.

Others that have been removed include Palo Alto Networks, Shopify and Xylem so there might be a loss of conviction into the near-term prospects of technology stocks occurring?

The following were freshly included:

• AltaGas
• Applied Materials
• AXA
• Diageo
• IQVIA
• Merck

Remain on the Top 30 list (among others):

• AirBNB
• Amazon
• Boston Scientific
• Constellation Software
• Microsoft
• Moody’s
• Snowflake
• Visa

Reading between the lines, it’s not that those stocks that have been removed are no longer considered undervalued or great investments; it’s more that even better prospects are now available elsewhere.

Also noted: only nine out of the Top 30 managed a positive return throughout the first three months of the calendar year, led by ConocoPhilips and Engie.

WiseTech Global (down -44.6%) put in the worst performance on the list.

(Do note that, in line with all my analyses, appearances and presentations, all of the above names and calculations are provided for educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions.)  

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P.S. II – If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

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