Jefferies' analysis suggests the AI capex cycle may reach its peak not through reduced spending, but through investor resistance to continued capital outflows. The report identifies a significant wealth transfer from US-based hyperscalers to North Asia, particularly Korea and Taiwan, as a pivotal factor. This shift is driven by the rapid growth of chipmakers and suppliers in the region, which has attracted substantial investment.

The report underscores a growing imbalance in capital distribution, with the combined market capitalisation of Korea and Taiwan rising from US$3.2 trillion at the start of 2023 to US$9.8 trillion. This threefold increase highlights the region's dominance in AI-related manufacturing and supply chains. The flow of capital has been accelerating as global demand for AI infrastructure expands.

The four major US hyperscalers—Microsoft, Alphabet, Amazon, and Meta—have seen their stock prices rise by 180 per cent since the start of 2023. However, they have outperformed the S&P 500 by only 44 per cent, indicating a relative slowdown in their growth compared to the broader market. This performance gap suggests that investors are increasingly allocating capital to regions perceived as more strategically positioned in the AI sector.

The shift in investment patterns could lead to increased costs for companies relying on US-based hyperscalers, as competition intensifies in North Asia. There may also be concerns around vendor lock-in, governance challenges, and the potential for market fragmentation. These factors could influence long-term strategies for firms navigating the evolving AI landscape.

While the report highlights the current momentum in North Asia, it also notes that the situation remains fluid. The interplay between global economic conditions, regulatory developments, and technological advancements will likely shape the trajectory of AI investment in the coming years. The outcome of this dynamic remains to be seen.