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Highlights
- Macquarie expects artificial intelligence investment to remain a major driver of earnings growth across Australian companies.
- The broker favours companies with improving earnings momentum while remaining cautious on Australia's major banks.
- Infrastructure, insurance and AI-enabling businesses are expected to remain key themes during the upcoming reporting season.
Artificial intelligence investment is emerging as one of the dominant themes ahead of Australia's upcoming earnings season, according to Macquarie. The broker believes improving earnings momentum, rather than expectations for lower interest rates, will increasingly determine market leadership during FY27. As reporting season approaches, attention is shifting towards businesses benefiting from AI-related capital expenditure, infrastructure investment and resilient earnings growth. These developments are also strengthening interest across the ASX 200 , particularly within ASX Technology Stocks and other sectors connected to digital infrastructure.
AI investment continues supporting earnings
Macquarie believes global investment in artificial intelligence is becoming an increasingly important earnings driver for Australian companies.
Rather than viewing AI as a technology-only theme, the broker expects spending on digital infrastructure to support multiple industries across the Australian economy.
Investment continues flowing into:
- Data centres
- Cloud infrastructure
- Power infrastructure
- Industrial property
- Resources supply chains
These areas continue benefiting from expanding global AI infrastructure requirements.
Reporting season shifts attention to earnings quality
Macquarie expects the upcoming reporting season to place greater emphasis on earnings delivery rather than valuation expansion.
The broker argues that companies demonstrating genuine earnings upgrades may outperform those relying primarily on expectations of lower interest rates.
According to the report, sustainable earnings growth is likely to become increasingly important as monetary policy remains restrictive.
Higher interest rates remain an important factor
Despite market expectations surrounding future policy easing, Macquarie believes interest rates could remain elevated for longer.
Higher borrowing costs continue influencing:
- Consumer spending
- Housing activity
- Corporate investment
- Business confidence
- Earnings growth
This environment may create greater differentiation between companies with resilient earnings and those facing operational pressure.
Companies benefiting from higher rates
Macquarie continues favouring businesses that may benefit from a higher interest rate environment.
The broker highlights several companies operating in sectors where elevated rates may continue supporting earnings, including:
- QBE Insurance Group (ASX:QBE)
- Suncorp Group (ASX:SUN)
- Challenger Limited (ASX:CGF)
- Medibank Private (ASX:MPL)
- Computershare Limited (ASX:CPU)
These businesses operate across insurance, financial services and registry operations where higher interest income may provide additional support.
Defensive infrastructure remains attractive
Infrastructure businesses also remain among Macquarie's preferred areas.
The broker highlights:
Both companies operate long-term infrastructure assets that provide relatively stable cash flows regardless of broader economic conditions.
Infrastructure businesses often attract attention during periods of economic uncertainty because of their comparatively predictable operating models.
AI enablers remain preferred exposure
Rather than focusing directly on software developers, Macquarie continues preferring businesses supporting AI infrastructure.
Goodman Group (ASX:GMG) remains the broker's preferred AI-related exposure because of its growing role in industrial property and data centre infrastructure.
As artificial intelligence investment expands globally, demand for logistics assets and digital infrastructure continues increasing.
The broker expects AI-related capital expenditure to remain supportive throughout the reporting season.
Earnings surprises may shape reporting season
Macquarie also identified companies where its internal earnings expectations differ from broader market consensus.
Potential positive earnings surprises include:
- James Hardie Industries (ASX:JHX)
- WEB Travel Group (ASX:WEB)
- GrainCorp Limited (ASX:GNC)
- Dexus (ASX:DXS)
- Coles Group (ASX:COL)
- Cleanaway Waste Management (ASX:CWY)
- Universal Store Holdings (ASX:UNI)
- News Corporation (ASX:NWS)
Meanwhile, the broker remains more cautious on:
- Domino's Pizza Enterprises (ASX:DMP)
- IDP Education (ASX:IEL)
- Insurance Australia Group (ASX:IAG)
- Audinate Group (ASX:AD8)
- Endeavour Group (ASX:EDV)
- AGL Energy (ASX:AGL)
These differences illustrate how company-specific earnings performance may drive share price movements during reporting season.
Banks remain the least favoured sector
One of Macquarie's strongest views remains its cautious stance towards Australia's major banks.
The broker continues expressing concern over:
- Elevated valuations
- Slower earnings momentum
- Competitive lending conditions
- Interest rate uncertainty
Commonwealth Bank of Australia (ASX:CBA), Westpac Banking Corporation (ASX:WBC), Australia and New Zealand Banking Group (ASX:ANZ) and National Australia Bank (ASX:NAB) remain among the least preferred sectors within the broker's coverage.
Looking ahead
Market attention over the coming weeks is expected to focus on:
- Company earnings
- AI-related investment
- Margin performance
- Interest rate expectations
- Management outlook statements
Reporting season is likely to provide greater clarity on how artificial intelligence investment is translating into financial performance across Australian companies.
Macquarie expects artificial intelligence investment to remain one of the strongest drivers of Australian corporate earnings as reporting season approaches. The broker continues favouring businesses demonstrating improving earnings momentum, infrastructure exposure and AI-related demand while maintaining a cautious stance towards Australia's major banks. As FY27 begins, earnings delivery rather than valuation expansion is expected to become the primary focus across the Australian share market.
