GREED & fear: Down Under shokku

Research evidence excerpt

GREED & fear: Down Under shokku

2 July 2026

Down Under shokku

London

GREED & fear has been consumed of late with writing the Asia Maxima quarterly and watching the World Cup

which has been enjoyable except for the abomination of “hydration breaks”. Still there is no doubt that markets

remain hyper-focused on the AI capex cycle and how it might end. GREED & fear’s base case, as discussed

here last week (see GREED & fear – The mother of all cycles, 25 June 2026), is that the cycle is most likely to

end in the US when investors suddenly focus on the lack of returns from the continuing massive spending

which amounts to an equally massive transfer of wealth from the hyperscalers’ balance sheets to North Asia,

as reflected in the increased capitalisations of the Korean and Taiwanese stock markets. The combined stock

market capitalisations of Korea and Taiwan have more than tripled from US$3.2tn at the start of 2023 when

the AI story kicked off in stock markets to US$9.8tn, according to Bloomberg (see Exhibit 2).

Exhibit 1: US four major hyperscalers' share prices relative to S&P500

330 170 US Hyperscalers 4 Index relative to S&P500 (RHS)

300 160

270 150

240 140

210 130

180 120

150 110

120 100

90 90

Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 Jul-24 Oct-24 Jan-25 Apr-25 Jul-25 Oct-25 Jan-26 Apr-26 Jul-26

Note: Market cap-weighted index of Microsoft, Alphabet, Amazon and Meta. Source: Bloomberg, Jefferies

This is why, in GREED & fear’s view, a key chart to monitor going forward is the relative performance of the

hyperscalers in the context of the S&P500 (see Exhibit 1). For the cycle is most likely to end not because the

hyperscalers suddenly rein in their spending but because markets start to push back against that spending.