Today’s News

The Big Picture

• Australian inflation falls to 4.2% in April. Australia's monthly CPI slowed to 4.2% in April, down from 4.6% in March and below the 4.4% consensus forecast. The fall was driven largely by the federal government's temporary halving of the fuel excise from 1 April. The result marks the first inflation reading since the excise cut took effect, though the relief is expected to be temporary. (ABS)
  
  

• Government proposes JobSeeker overhaul. The proposal is to place the 1 million Australians who access JobSeeker into three tailored support tiers, in what experts are describing as the biggest shake-up to the employment system in decades. While unemployment sits at 4.5%, around 20% of jobless Australians are long-term unemployed, a cohort the current $2 billion system has long been criticised for failing. (ABC)
  
  

• Chalmers plays down hopes of broader CGT exemptions. Treasurer Jim Chalmers has urged caution against interpreting ongoing consultations with business groups as a sign that sectors beyond tech start-ups will be carved out from the capital gains tax changes. Chalmers said the consultations were about getting implementation details right, not pre-empting broader exemptions from the reform package. (AFR)
  
  

• Mining giants tax credit cuts back on the agenda. The government is considering clawing back fuel tax credits paid to mining companies, worth more than $10 billion annually, before the Iran war shelved the plan. BHP alone received an estimated $627 million in credits in 2024, with Rio Tinto, Fortescue and Hancock Prospecting collecting $416 million, $309 million and $128 million respectively. The idea could return at Labor's national conference in July or the mid-year budget update if the war ends soon. (ABC)

Companies in the news

• SK Hynix and Micron both cross US$1 trillion mark. Shares in South Korean chipmaker SK Hynix surged 10% on yesterday, extending a rally that has seen its stock almost triple since the start of the year. US rival Micron crossed the US$1 trillion mark a day earlier after UBS tripled its share price target, sending shares up nearly 20%. The surge in AI-driven demand has created a global memory chip shortage, pushing up sales and valuations for both manufacturers. (BBC)
  
  

• NASA picks Bezos over Musk for US$20 billion moon base. NASA has announced plans for three uncrewed lunar missions this year to begin construction of a $20 billion moon base, selecting Jeff Bezos's Blue Origin ahead of Elon Musk's SpaceX to conduct the first. The missions will be followed by more than a dozen further flights in coming years, with NASA citing last month's successful Artemis II mission as the catalyst for accelerating the moon base plan. (The Guardian)
  
  

• BP chairman sacked for bullying less than a year into the role. BP has removed chairman Albert Manifold with immediate effect over concerns about "bullying" and "overbearing" behaviour. The board cited "serious concerns" related to "important governance standards, oversight and conduct.” (BBC)
  
  

• Guzman y Gomez and Temple & Webster set to be dropped from ASX 200. The consumer staple businesses are expected to be booted from the index in next week's quarterly rebalance as investors shun consumer discretionary stocks due to recession fears. Miners Kingsgate and Minerals 260, lithium developer Elevra Lithium and Electro Optic Systems are among those tipped to take their places. (AFR)

What the…?

Ferrari unveils first EV. Ferrari has launched the Luce, its first fully electric vehicle, the brainchild of former Apple chief design officer Jony Ive. The car will be priced at €550,000 with the Italian luxury brand describing the design as "polarising" and deliberately aimed at attracting a new fan base rather than winning over traditional petrol heads. The companies share price plummeted more than 8% on the back of the news. (AFR)

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Today’s Insight

Sharon AI and the AI infrastructure trade

An Australian company has just landed $2.2 billion in contracts, attracted a former OpenAI prodigy as a backer, and is simultaneously being called a fraud by short sellers. Simon brought it to the table on a recent episode of Equity Mates Investing. (Spotify | Apple | YouTube)

Meet Sharon AI (NASDAQ:SHAZ). Listed in the US, founded by an ex-Macquarie banker, and operating out of Australian data centres. The business model is straightforward: buy Nvidia chips, install them in data centres they do not own, and rent that compute out by the hour to companies that need AI processing power. Think of it as AI subletting.

The bull case. First, in the space of six weeks, Shaz announced over $2.2 billion worth of contracts across two customers. Second, Leopold Ashenbrenner, a 24-year-old former OpenAI researcher who launched a fund in September 2024 with $225 million and now manages $13.7 billion in positions, disclosed a new stake in Shaz via a quarterly SEC filing. His investment thesis is simple: buy the bottlenecks of the AI buildout, which he sees as power and compute.

The bear case. Despite those headline contracts, Shaz is currently generating just $290,000 in revenue. One of its anchor customers, which is supposed to be paying Shaz $250 million per year, only reported $40 million in total revenue themselves last year. Short sellers have flagged this publicly.

As Ren put it, if this AI cycle does eventually tip over, these are exactly the stories people will look back on as the warning signs.

The CEO also has a colourful history, having reportedly been excluded from Crown Casino in 2013 following a $32 million winning streak that staff found suspicious.

Today in Equity Mates