For the better part of two years, Australian investors have watched the artificial intelligence story play out largely on someone else’s ledger. The gains accrued to Nvidia, to Microsoft, to a clutch of United States hyperscalers, while the local bourse plodded along on its familiar diet of iron ore, dividends and the big four banks. A new strategy note from Macquarie now argues that the AI wave is doing more to shape the corporate earnings picture than most people appreciate, and it comes with a pointed piece of advice: lean into the stocks with genuine AI exposure, and be wary of paying up for the banks.
The call, laid out in a Macquarie research note covered by Livewire Markets, sits at the intersection of two debates that have preoccupied the market all year. The first is whether the AI boom is a durable earnings event or a speculative bubble waiting to deflate. The second is whether the ASX, with its heavy weighting towards financials, is positioned to benefit from a technology shift that has so far rewarded a narrow band of global winners. Macquarie’s answer to the first question is that the earnings are real and broadening. Its answer to the second is that investors need to be far more selective than simply riding the index.
The thesis: AI is quietly rewriting the earnings ledger
The core of the Macquarie argument is that artificial intelligence has moved beyond a story about a handful of chipmakers and cloud providers, and is now feeding into the earnings of companies that build, power and use the technology. That shows up in demand for data-centre capacity, in the energy and infrastructure needed to run it, and in the productivity gains starting to appear across sectors that adopt AI tools with discipline. In that reading, the earnings boom is not a broad-based tide lifting every boat, but a redistribution: capital and profit flowing towards businesses genuinely plugged into the AI build-out, and away from those that merely talk about it.
The flip side of that logic is the caution on the banks. Australia’s major lenders have enjoyed a remarkable run, with valuations pushing to levels that many strategists regard as difficult to justify on fundamentals alone. Commonwealth Bank in particular has traded at multiples that look rich by any historical measure, propped up in part by passive and superannuation flows that keep buying regardless of price. Macquarie’s point is not that the banks are about to collapse, but that they offer little exposure to the structural growth story now driving earnings, while carrying valuations that leave scant margin for error. In a market where the interesting growth is happening elsewhere, paying premium prices for slow-growing financials looks, on this analysis, like the wrong trade.
The other side of the argument
Not everyone shares the enthusiasm, and the bears have a respectable case. The most obvious counter is valuation risk on the AI side of the ledger rather than the banks. Global AI-linked stocks have re-rated dramatically, and any wobble in the pace of data-centre spending or a disappointment on the promised productivity dividend could hit those names hard. Skeptics point out that a great deal of the projected AI earnings still rests on assumptions about adoption and monetisation that have yet to fully materialise, and that concentration in a few winners makes the whole complex fragile.
There is also a defensive argument for the banks that Macquarie’s note has to contend with. In an uncertain global environment, the majors offer fully franked dividends, robust balance sheets and a domestic earnings base that is relatively insulated from the swings of the AI trade. Commonwealth Bank’s own chief economist has been among those publicly cautioning against declaring an AI bubble, arguing the productivity story is early and uneven rather than a mania. For income-focused investors, particularly retirees drawing on franking credits, a wholesale rotation out of financials into higher-beta AI plays is not a costless switch. The choice, in other words, is not simply growth versus value, but risk appetite, income needs and time horizon.
What it means for Australia
The Macquarie call lands squarely on a structural feature of the Australian market that has frustrated local investors for years. The ASX 200 is heavily concentrated in banks and resources, which means the average Australian’s superannuation is disproportionately exposed to financials and comparatively light on the technology names that have powered global returns. If Macquarie is right that AI is the dominant earnings driver of this cycle, then the very structure of the local index becomes a headwind rather than a shelter. That has real consequences for the millions of Australians whose retirement savings sit in index-tracking or bank-heavy portfolios by default.
It also sharpens a question that FluentSea has returned to repeatedly: whether Australia is building the AI economy or merely hosting and consuming it. The most direct local beneficiaries of the AI build-out are the data-centre operators, the digital infrastructure providers and the energy players positioned to feed enormous power demand, alongside a smaller cohort of software and services firms with credible AI products. For self-directed investors and the funds managing the nation’s retirement pool, the practical takeaway is that generic exposure to “the market” may no longer capture where the earnings growth is actually happening. Picking the right side of the AI divide has become a portfolio decision, not just a thematic curiosity.
What’s next
The proof, as ever, will come in the numbers. The upcoming reporting season will test whether AI-linked earnings are broadening in the way Macquarie suggests, and whether the banks can keep justifying their premium valuations against softer credit growth and margin pressure. Watch too for how the big superannuation funds respond, since any meaningful reweighting away from financials by the largest institutional holders would move the market in its own right. And keep an eye on the global AI names that set the tone: a stumble in United States data-centre spending or a cooling in chip demand would ripple straight through to the local stocks Macquarie is backing.
For now, the note is a reminder that the AI story is no longer confined to Silicon Valley earnings calls. It is starting to reshape how a major investment bank thinks about the Australian market, and it is asking local investors a blunt question about whether their portfolios are pointed at the past or the future.
Sources: Livewire Markets.
