Rudi's View | May 13 2026
This story features CSL LIMITED, and other companies.
For more info SHARE ANALYSIS: CSL
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS
Healthcare remains under pressure, and troubled CSL is not helping, but the market is warming yet again to future AI beneficiaries.
By Rudi Filapek-Vandyck, Editor
Investing in the Australian share market continues to be a tricky affair as the number three index weight, CSL ((CSL)), yet again issued a disappointing profit downgrade on Monday morning, alongside a -US$5bn asset write-down.
The share price shellacking on the day takes the pain for loyal shareholders to -74% since August last year.
The last time our eyes witnessed a share price below $100 was back in 2015, when the trend was still very much up.
It’s almost hard to believe those shares peaked at $342.75 during the covid-pandemic lockdowns.
Healthcare stocks remain very much on the nose in Australia, as well as elsewhere, and market commentators and sector analysts continue to debate what exactly is happening, and when the trend might turn?
My five cents worth are the sector is now on the wrong side of governments funding the burden of healthcare services, the world around, and the Trump administration in the US is not helping either.
As per always, the dramatic changes in industry dynamics are hitting some companies harder than others, but anxious investors (who have plenty of alternatives available) are in no mood to differentiate.
Thus we witness all of Cochlear ((COH)), Fisher & Paykel Healthcare ((FPH)), Nanosonics ((NAN)), Pro Medicus ((PME)), Ramsay Health Care ((RHC)), ResMed ((RMD)), Sonic Healthcare ((SHL)), and others trading inside a channel of bearish share price trend patterns.
Whether such blanket approach is justified is by the by for the time being. No need to argue with a market that has made up its mind; neither the trend-following traders & algo-robots or disappointed shareholders will change their mind if you do.
If you do own shares in the sector, as I do with ResMed and Pro Medicus, you simply have to bide your time and let the process run its course.
As has also become apparent from last year’s sell-all-prior-AI-beneficiaries move, a time will come when the market starts identifying Winners and Losers and which shares have indiscriminately been sold off unfairly and too deeply.
Time to roll out that often quoted piece of investor wisdom from Peter Lynch, one of the truly greats in the industry: know what you own, and why you own it.
ResMed’s recent quarterly updates (plural) have been nothing but robust and excellent. Pro Medicus, I agree with many others, remains one of the great growth stories on the local bourse.
But there’s no doubt today’s shareholders will have to be patient. This process isn’t over yet, not while CSL et al continue to surprise to the downside.
As reported after the February results season, CSL is no longer included in my selection of All-Weathers and neither does the FNArena-Vested Equities All-Weather Model Portfolio still have exposure.
Two conclusions automatically come to mind:
-It is never too late to sell
-Imagine trying to sooth the pain through averaging down!
A Mixed Picture From Corporate Australia
As also shown during Monday’s session, not every profit warning or disappointing market update is treated equally.
A profit warning from distributor and producer of poultry and fodder, Inghams Group ((ING)), saw its share price jump higher while a seemingly underwhelming market update by Metcash ((MTS)) was equally positively rewarded.
In both cases, I suspect, shares had already discounted the bad news forthcoming which, as it turned out, was not as bad as feared.
Contrary to what these profit warnings suggest, in addition to a rather moribund market overall, not every company in Australia outside of energy and mining is operating in deep misery.
Dyno Nobel’s ((DNL)) interim result is the latest case in point, with those shares putting in a handsome rally on an overall bleak-looking day.
FNArena’s Corporate Results Monitor currently has ‘beats’ and ‘misses’ running at approximately equal numbers, but rewards and punishments after results are not by default that straightforward.
Broader market forces remain at work and positive share price momentum remains important in the here and now.
Note The AI-Theme Recovery
Judging from social media postings and brief exchanges with FNArena subscribers, there’s a lot of frustration among local investors when comparing the local bourse –sluggish and indecisive– with the run-away bull markets in the US and in countries like South-Korea and Taiwan.
Though some of that AI-inspired overseas enthusiasm seems to have injected new life into some AI beneficiaries listed on the ASX too, albeit not necessarily in the same parabolic fashion.
Small cap technology company SKS Technologies’ ((SKS)) recent price chart looks a lot like that of SK Hynix or Intel and in similar fashion SKS’ stellar rise is based on big upgrades in earnings forecasts, with more anticipated to come through.
But equally, share prices in data centre developers and operators have moved well-off their March lows. Think Goodman Group ((GMG)), but also Infratil ((IFT)), NexDC ((NXT)) and Macquarie Technology ((MAQ)).
This renewed enthusiasm is not solely inspired by ongoing positive trends emanating from Q3 results in the US.
Positive insights from NextDC and Infratil –the latter landing Australia’s largest ever contract for 49.75%-owned CDC– will have equally convinced investors those share prices have been treated indiscriminately and unfairly.
With this segment of the Australian bourse having been out-of-favour since around September last year, here is an important message for today’s investors in healthcare stocks — this too shall end, eventually.
Meanwhile, in the background of all of the above, ASX-listed non-technology companies are increasingly communicating their plans and intentions through adoption and implementation of AI.
AI in Australia first started to genuinely feature during corporate results in February.
At the Macquarie Australia Conference last week it became a “pervasive theme”, according to Macquarie analysts, who also report “companies shared tangible benefits and data about their adoption of AI”.
Investors should prepare to read and hear a lot more about AI from Australian businesses as this will increasingly accumulate into the defining feature to separate Winners from Laggards, just as has happened in overseas markets.
In the words of Macquarie: “AI is becoming a whole-economy operating and capital-allocation variable, not a narrow technology-sector story”.
AI Adoption Is Spreading
Key AI beneficiaries should include those linked to the ongoing strong demand for infrastructure, such as the mentioned data centre operators, but equally companies that are indirectly rewarded, such as AGL Energy ((AGL)), APA Group ((APA)), Megaport ((MP1)), Telstra ((TLS)), and Superloop ((SLC)).
Others are seeking to benefit from using this new technological tool.
Qantas Airways ((QAN)) developed an AI tool in just four weeks (instead of spending millions of dollars over multiple months) to predict and improve on-time performance.
Wesfarmers’ ((WES)) Bunnings has deployed a conversational AI agent, “buddy”, that is delivering materially higher conversion rates and order values.
Breville Group’s ((BRG)) CEO stated AI could shorten product development cycles by six months or more and its legal team is already 400% more productive, saving over $1m this year.
There are multiple direct connections into the resources sector as well with Alpha HPA ((A4N)), for example, expected to benefit through its high-purity alumina used in advanced chip applications.
Management presentations from all these companies at the Conference referenced or featured AI in some form or benefit. Idem for recent financial result updates from News Corp ((NWS)), REA Group ((REA)), and Westpac ((WBC)).
Both Ventia Services ((VNT)) and Mayfield Group Holdings ((MYG)) recently identified AI infrastructure and data centres as a fresh source for future growth, though Ventia has fewer (labour) limitations to deal with.
On Macquarie’s number crunching, the group of AI enablers –those building the infrastructure– have outperformed in the recent rebound for AI-related stocks on the ASX.
Even the lower-quality sector laggard, DigiCo Infrastructure REIT ((DGT)) has joined in on the theme revival.
Going forward, and as also proven by TechnologyOne ((TNE)) in February and by Infratil, NextDC and SKS Technologies more recently; the market stands ready to reward tangible progress with this new technology, irrespective of sector or specific format.
This is rapidly becoming the task at hand for local management teams: show that you can deliver tangible AI benefits and your shareholders will be rewarded.
August will be fascinating and polarising at the same time.
Before then, we still have a series of in-between financial result releases to digest, including from Aristocrat Leisure ((ALL)), GrainCorp ((GNC)) and Xero ((XRO)) this week.
FNArena’s Corporate Results Monitor:
https://fnarena.com/index.php/reporting_season/ (scroll down the page for the calendar).
Meanwhile, higher energy prices combined with cost-of-living pressures and persistent inflation will continue to force more vulnerable businesses to downgrade market expectations a la Cochlear ((COH)), CSL, Gentrack Group ((GTK)), Woolworths Group ((WOW)), and others.
AI cannot cure all ailments. The local market will remain tricky and ultra-polarised for much longer.
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