Still early: why the market broadening has years left to run
The next chapter of market returns looks very different, investors should be positioned to capture it.
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Over the past 12 months, investors positioned for a broadening in stock market performance have been exceptionally well rewarded for their patience.
By broadening, we mean the outperformance of stocks outside the US mega-cap tech sector which has driven benchmark returns over the better part of the past decade.
A great example is European equities. Resilient global businesses listed on European exchanges traded at 30-50% discounts vs US-listed peers, before many of these same companies went on to lead global markets over the past year.
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For those who feel they've missed the move, we'd argue you're still early.
Our view is this broadening is not a trade - it's a structural change in markets, and these changes take years to fully play out.
Evidence in the Numbers
Despite the continued hype around artificial intelligence and the likes of Nvidia (NYSE: NVDA), last year marked a quiet inflection point. Emerging markets, Europe, and value as a factor all outperformed the US and the mega caps.
So, the broadening is not a 'big call' we are making about the future, it is something that has already started, and the valuation backdrop tells you there's still a long way to go.
There remains an inconvenient truth for investors. You see it when you look at how the dominant benchmark exposures are priced against their 20-year history.
The US trades at a 20% premium to its long-run relative multiple, sitting on the 75th percentile. Quality and growth are above trend.
Meanwhile, value, emerging markets, Europe, and mid-caps all sit below their historical norms.
Put another way, the factors that dominate the benchmark are expensive; the factors that are underrepresented are cheap.
The structural shifts at play
The market broadening is about more than just a valuation mean-reversion story. There are powerful structural forces at play.
A major shift in Western economies away from consumption and towards investment is central to the broadening case.
Anyone who has travelled to a major Chinese city like Shanghai understands how behind most western governments are when it comes to infrastructure. There is a huge catch-up required to upgrade western infrastructure - whether it's social infrastructure, or physical infrastructure.
In addition to this there is the catch up in defence, while simultaneously continuing to build out the energy transition.
These priorities demand capital, and they will necessarily mean a rationing of consumption over time.
This matters enormously for equity markets. Today, the overwhelming majority of benchmark market capitalisation sits in consumption-oriented businesses.
The shift towards investment-oriented businesses (think industrials, energy infrastructure, healthcare facilities, defence companies) is going to be painful for benchmark-like portfolios and rewarding for those positioned for continued broadening.
Simultaneously there is shifting regional fiscal impulse. After years of fiscal austerity, Europe and parts of Asia are opening the spending taps in a way we haven't seen in a generation, which has big implications for stock market performance.
Then, you have artificial intelligence.
You might think AI is a force that would promote continued market concentration. That's true while markets continue to be fixated on US-based AI enablers.
But real-world AI adoption is being overlooked.
Value and the AI market darlings will slowly but surely shift away from the enablers (hardware) to the adopters (under appreciated companies across various industries where AI gains aren’t yet priced in).
We've seen this movie before: the companies that built the internet's infrastructure were not the ones that ultimately captured most of its value.
3 'broadening' stocks to watch
SLB NC NYSE: SLB
The oil services industry has endured a brutal decade-long downturn, particularly for companies exposed to offshore deep-water drilling rather than US shale.
That cycle is now turning. Shale producers are prioritising cash flow and dividends, and the geological imperative to invest just to maintain production is redirecting capital back to offshore.
SLB is the technology leader in this space, trading on 17 times depressed earnings at the beginning of what we see as a very long-term recovery.
Its digital business, built on proprietary data and AI-driven insights, carries double the average corporate margin and is growing rapidly. This is a cyclical winner that is also a mispriced AI adoption story.
Salesforce NASDAQ: CRM
Enterprise software has gone from hero to zero in a remarkably short period.
Three years ago, companies like Salesforce, Zoom, and HubSpot were must-own names trading on revenue multiples. Today, the market is back to viewing them on good old P/E ratios – and at a discount to their growth.
In our view, the market’s concern around AI disruption across the software sector, provides a great opportunity to take advantage of irrationality.
We think the fear fundamentally misunderstands what drives value in enterprise software: it is not the code, it is the network effect. These companies own their customers.
Software sets the rules by which a business operates, and large language models – probabilistic by nature – are not a substitute for systems that need to be deterministic. Nobody wants their wages calculated on a probabilistic basis.
Salesforce trades on a P/E of 14.5 times with sustainable growth of around 14% per annum, and we think as an AI adopter, there is great upside potential embedded in the business.
Brookdale Senior Living Inc NYSE: BKD
Nothing is more predictable than ageing.
In the US, aged care is predominantly a private-pay market with significantly lower regulatory risk than many other developed economies. The supply-demand dynamics are extraordinary: current rents sit below replacement cost, meaning developers cannot profitably build new supply, while the first baby boomers have just turned 80.
By 2030, demand for aged care in the US is expected to double – and we are not meeting today’s demand.
Brookdale trades at roughly a third of the multiple of the industry leader, Welltower NASDAQ: WELL , at 10 times EV/EBITDA.
We are at the very beginning of an enormous pricing cycle.
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Portfolio positioning takeaways
In terms of broader portfolio positioning within Antipodes' global portfolios, regionally we are overweight Europe – but in multinational companies with global earnings streams.
We are overweight Asia and emerging markets, where quality, typically an expensive factor, is actually quite cheap, and where we favour domestic-facing businesses.
We are underweight North America, particularly in technology and semiconductor stocks, choosing instead to position for AI adoption rather than extrapolating the current infrastructure buildout.
We maintain a defensive leg anchored in healthcare and infrastructure, a structural trends sleeve where we are positioning for the winners of tomorrow, and a cyclical sleeve where rigorous industry research allows us to screen out value traps and own only the companies with the competitive advantages to emerge stronger from downturns.
But for the everyday investor, perhaps the most important point is that concentration is a form of risk, even when it does not feel like it.
A broadening market rewards investors who allocate to diversified and truly international global equities portfolios.
At Antipodes, our pragmatic value philosophy – paying the right price for resilience and growth, wherever we find it – has always been designed for exactly this kind of environment.
We believe it is a great diversifier for core portfolios, and the evidence, both in the market and in our own results, suggests the next chapter will be even more rewarding than the last.
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To 31 January 2026, The Antipodes Global Value Fund has delivered +12.4% p.a. after fees since inception (1 July 2015).
Access the strategy on the ASX via the Antipodes Global Value Active ETF (ASX: AGX1)
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Jacob Mitchell is Antipodes’ chief investment officer. He is an award-winning fund manager, with more than 25 years' experience investing in equity markets. Jacob founded Antipodes in 2015 after deciding to leave Platinum Asset Management where he spent 14 years and worked as deputy chief investment officer and a portfolio manager of the flagship Platinum International Fund.
Jacob holds a Bachelor of Commerce from the University of Western Sydney.
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Jacob Mitchell is Antipodes’ chief investment officer. He is an award-winning fund manager, with more than 25 years' experience investing in equity markets. Jacob founded Antipodes in 2015 after deciding to leave Platinum Asset Management where he...
Expertise
Jacob Mitchell is Antipodes’ chief investment officer. He is an award-winning fund manager, with more than 25 years' experience investing in equity markets. Jacob founded Antipodes in 2015 after deciding to leave Platinum Asset Management where he...
Expertise
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