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Key points:
AI trade volatility linked to leverage, liquidity and hyperscaler cash flow pressuresChinese AI entrants like DeepSeek and Kimi seen as lower‑end competitive threatNeo cloud names such as Sharon AI, Nebius and CoreWeave viewed as pure‑play AI compute exposure
Jonathon Higgins from Unified Capital Partners sets out a cautious view on the recent shake‑up in the global AI trade, pointing to a “perfect storm” of excess liquidity, leveraged positioning and mounting investor scrutiny of hyperscalers’ negative free cash flow as capital expenditure soars. Higgins notes that sentiment has shifted sharply, with AI‑linked indices such as Korea’s having run too hot before a sharp correction.
Higgins sees rising competitive pressure from Chinese AI players such as DeepSeek and Kimi, which appear to undercut US rivals while reportedly training models on Nvidia chips rented via Alibaba. In his view, these offerings mostly threaten the lower end of the market, while leaders like Anthropic and OpenAI remain better positioned. He states that demand for compute and AI services still runs well ahead of supply, reinforced by hyperscalers flagging capacity constraints.
On “neo clouds”, Higgins describes them as more pure‑play vehicles for AI compute than traditional cloud “rental” models at Microsoft, Amazon and Google. He highlights US‑listed Sharon AI, Nebius and CoreWeave as preferred names, and in Australia points to sovereign AI compute plays Firmus (via Maas Group) and Sharon AI, which he notes has announced substantial contracts and could pursue an ASX listing.
