Global markets have entered a period of heightened uncertainty. Escalating tensions in the Middle East have triggered sharp swings in oil prices and volatility across equity markets, forcing investors to reassess portfolio positioning.
Yet for professional stock pickers, volatility often creates opportunity.
At a recent Australian equities event hosted by Pinnacle Investment Management, several fund managers from firms including Firetrail, Hyperion, Solaris, Longwave and Spheria shared where they see value emerging amid the turbulence. The discussion ranged from geopolitical risks to the growing influence of artificial intelligence on corporate strategy and market valuations.
If there was a common theme, it was that market dislocations are forcing investors to rethink both technology exposure and traditional defensive sectors.
The “SaaSpocalypse” Forces a Technology Reset
Technology stocks have experienced a dramatic reset in recent months following fears that artificial intelligence could disrupt the traditional software-as-a-service model.
The sell-off has been particularly painful for funds heavily exposed to high-growth software companies. Investors have dubbed the rout the “SaaSpocalypse”, reflecting how quickly sentiment shifted toward the sector.
One of the most affected names on the ASX has been Xero, along with logistics software provider WiseTech Global. Both stocks suffered steep declines during the global technology sell-off.
Hyperion Asset Management, whose portfolios have historically been tilted toward high-growth technology companies, responded by significantly trimming its positions in both firms.
Yet rather than abandoning the technology theme entirely, the firm has shifted capital toward businesses that it believes are embracing artificial intelligence rather than being threatened by it.
Hyperion Doubles Down on Block
One of Hyperion’s most notable moves has been to increase its exposure to fintech group Block, the payments company founded by Jack Dorsey.
Block operates several major financial platforms including Square, Cash App and Afterpay. According to Hyperion’s investment director Jolon Knight, the company has been unusually aggressive in integrating artificial intelligence into its operations.
Management recently announced significant workforce reductions while expanding the use of AI tools across its developer ecosystem and customer platforms. The move is designed to increase productivity while accelerating product development.
Hyperion responded by increasing its portfolio weighting in Block from roughly 5 per cent to nearly 10 per cent, making it the fund’s largest position.
The market has responded positively to the strategy. Block’s Australian-listed shares have rallied more than 20 per cent in recent weeks, reversing much of the decline seen earlier in the year.
For investors, the message is clear: AI is not simply a threat to technology companies, it is also becoming a differentiator between winners and losers.
Selective Opportunities Emerging in Technology
Other fund managers at the event echoed the view that the technology sell-off may have gone too far in certain cases.
Solaris portfolio manager Charles Story argued that the most profitable strategy during market corrections is often to adopt a contrarian mindset, provided investors remain selective.
One stock the firm has recently added is online property listings platform REA Group.
REA’s shares have fallen sharply over the past year, partly due to broader concerns about technology valuations and the potential disruption caused by generative AI. However, Story believes the company possesses a structural advantage that will be difficult for competitors to replicate.
Over more than two decades, REA has built what is arguably the most comprehensive property dataset in Australia. That proprietary data gives the platform a strong defensive moat in an environment where many software businesses face pressure from new AI tools.
For investors evaluating technology companies today, data ownership is emerging as one of the most valuable assets.
A Turnaround Opportunity in Megaport
Another technology name attracting renewed interest is network infrastructure platform Megaport.
Megaport’s shares have fallen around 38 per cent this year after a disappointing earnings result, prompting several investors to reassess the company’s long-term prospects.
Longwave Capital’s chief investment officer David Wanis said the firm recently initiated a new position in the stock after avoiding it during its earlier period of market popularity.
The key reason for the change in view is valuation.
While the company previously failed to meet Longwave’s quality thresholds, the significant decline in its share price has created what the firm believes could be an attractive entry point if operational performance improves.
The AI Infrastructure Trade
Beyond software companies themselves, some investors are looking for opportunities in businesses that benefit indirectly from the growth of artificial intelligence.
One example cited at the event was metal recycling group Sims Limited.
The company operates a division called Sims Lifecycle Services that specialises in decommissioning and recycling data centre hardware. As demand for computing power increases, large volumes of server equipment are regularly upgraded or replaced.
This creates a growing market for companies that can recover and resell valuable components, particularly memory modules.
In effect, the rapid expansion of AI infrastructure is generating secondary investment opportunities outside the traditional technology sector.
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Ramsay Health Care Draws Interest Outside Tech
Not all fund managers are focused on technology.
Firetrail Investment Management highlighted hospital operator Ramsay Health Care as a potential turnaround opportunity following the appointment of chief executive Natalie Davis.
Davis previously held senior roles at Woolworths, where she managed large-scale retail operations. Firetrail believes her experience overseeing complex logistics, extensive physical infrastructure and large workforces could translate well to the healthcare sector.
Ramsay’s most recent earnings result exceeded market expectations, helping lift the share price to its highest level in more than a year.
For investors, the case illustrates how leadership changes can act as catalysts for corporate turnarounds.
Volatility Is Creating a Stock Picker’s Market
The broader message from the Pinnacle event was that markets are entering a phase where active management may matter more than it has in years.
Geopolitical shocks, AI disruption and shifting interest rate expectations are creating sharp valuation swings across sectors. While that volatility can be uncomfortable for investors, it also creates opportunities for those willing to analyse individual businesses rather than simply follow market momentum.
As Firetrail’s Blake Henricks remarked during the discussion, fund managers are ultimately paid to adapt to the environment they face.
In markets defined by uncertainty, the ability to keep “dancing” may be the most valuable skill of all.