Jefferies names five top tech picks after August reporting season

Jefferies named Carsales.com, REA Group, Megaport, Infratil and Life360 as preferred TMT stocks after the August 2026 reporting season, citing strong balance sheets, pricing power and attractive valuations. The firm set buy-rated targets of A$33.50 for Carsales, A$195 for REA, A$26 for Megaport, NZ$17.70 for Infratil and US$61/A$29 for Life360. Key upside drivers include Megaport's 24% year-over-year core ARR growth and A$500 million of liquidity headroom, Infratil's 20% discount to NAV, and anticipated stronger Q4 growth at Life360 from advertising, users and price increases.

Analysis

The common factor across CAR, REA and LIF is monetization of high-intent consumer traffic rather than cyclical advertising volume. Their near-term earnings sensitivity is therefore to dealer/agent and advertiser ROI: if customers retain spend despite softer transaction volumes, incremental price rises should flow through at high gross margins and support valuation rerating. REA's lead-quality advantage is especially important because it raises the switching cost versus Domain (ASX:DHG), making a housing recovery an upside catalyst rather than a prerequisite for earnings growth.

MP1 and Infratil (NZX:IFT) are more exposed to the AI infrastructure capital cycle, but through different risk channels. MP1 benefits if enterprise and smaller cloud providers need network interconnection capacity as GPU scarcity pushes workloads across locations; this is not equivalent to a direct NVDA demand proxy and could persist even if GPU pricing normalizes. IFT's CDC exposure has substantial embedded duration, but the market will focus on grid connection timing, construction inflation and contracted customer economics; a nominal NAV discount is not actionable unless the data-center build pipeline converts without further capital dilution.

The likely consensus error is treating the basket as uniformly defensive growth. CAR and REA have clearer self-funded pricing/margin paths over the next 6-12 months, whereas MP1 and IFT require continued AI capex execution and have longer-duration valuation risk if rates rise. For LIF, user-growth data alone is insufficient: the key 1-3 month catalyst is evidence that advertising and subscription price increases lift ARPU without increasing churn; failure would expose a premium multiple to compression.

Key Decisions for Investors

• Initiate a 6-12 month long CAR / short DHG pair, sized market-neutral: CAR's dealer-software and diversified marketplace mix should hold pricing better than a more Australia-residential-listing-sensitive peer. Target 15-20% relative return; exit if CAR's domestic yield growth falls below mid-single digits for two reporting periods or dealer profitability materially deteriorates.
• Accumulate REA on housing-market or rate-driven pullbacks rather than chase momentum; use a 9-12 month horizon into listing-volume normalization and continued premium-product attachment. Risk/reward is favorable only while premium listing penetration remains stable; reassess on evidence of seller downgrades or sustained DHG lead-share gains.
• Treat MP1 as a tactical 3-6 month long only after confirming ARR growth and FY27 capex funding needs at results. A long MP1 / short an AI-infrastructure beta proxy is preferable to an outright position if the objective is interconnection share gains; avoid if management indicates incremental equity funding, deteriorating utilization, or ARR growth below 20%.
• Keep IFT on a watch list rather than buy solely on stated NAV discount. Upgrade only if CDC discloses contracted capacity, power availability and funding terms sufficient to protect per-share NAV through the buildout; the falsifier is construction delays or rising leverage that converts the discount into a warranted funding-risk premium.
• For LIF, wait for the next quarterly monetization update before adding. Go long only if MAU growth translates into accelerating advertising/subscription ARPU with controlled churn; a miss on revenue conversion would likely outweigh user-growth headlines over the following 1-3 months.