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Oracle hit hard in Wall Street's tech sell-off over its AI bet

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Re: Oracle hit hard in Wall Street's tech sell-off over its AI bet

#3

Post by JCM9 »

I’m bullish on AI as tech but folks are starting to sniff out that the financials of everything going on at the moment aren’t sustainable for much longer.

I hope we have more of a “reality correction” than full blown bubble bursting, but the data is increasingly looking like we’re about to have a massive implosion that wipes out a generation of startups and sets the VC ecosystem back a decade.

Re: Oracle hit hard in Wall Street's tech sell-off over its AI bet

#6

Post by hvb2 »

JCM9 wrote: post #3

I’m bullish on AI as tech but folks are starting to sniff out that the financials of everything going on at the moment aren’t sustainable for much longer. I hope we have more of a “reality correction” than full blown bubble bursting, but the data is increasingly looking like we’re about to have a massive implosion that wipes out a generation of startups and sets the VC ecosystem back a decade.

The tech is way underpriced right now. It's basically a subsidized market right now, with the money flowing in coming from the private sector.

The problem here is that it remains to be seen who is willing to pay for the service once it's priced at cost or even with a margin. And based on valuations of AI companies one would expect a huge margin.

Re: Oracle hit hard in Wall Street's tech sell-off over its AI bet

#7

Post by nickff »

dmoy wrote: post #2

So debt financing (Oracle) vs fund-it-more-on-your-own (other big tech?) vs fund-it-with-equity (startups?)... I guess that makes some kind of sense? Oracle raises 4x the debt of e.g. Google?

Many of the ‘AI data centers’ are being financed with debt; some are being done as joint ventures with companies like Blue Owl Capital (whose stock is also taking a beating).

Re: Oracle hit hard in Wall Street's tech sell-off over its AI bet

#8

Post by zerosizedweasle »

I said this earlier but: It's interesting to see the market try to do anything to rally. The problem is you guys are rallying on the thought that you've scared the Fed into cutting rates, but actually by rallying you short circuit it. You ensure they won't cut. And that's how the market's lillypad hopping thinking is actually just stupidity. You rallied, so now there are no rate cuts so the crash will be even more brutal.

Edit: They're trying to do everything they can to stop people from seeing this lol

Edit 2: Specifically trying to stop people from seeing this:

Yeah for sure but -

'It’s impossible to quantify how much cash flowed from OpenAI to big tech companies. But OpenAI’s loss in the quarter equates to 65% of the rise in underlying earnings—before interest, tax, depreciation and amortization—of Microsoft, Nvidia, Alphabet, Amazon and Meta together. That ignores Anthropic, from which Amazon recorded a profit of $9.5 billion from its holding in the loss making company in the quarter' - WSJ

Their earnings growth is their own money that they gave to OpenAI.

You have that waiting in the wings.

Re: Oracle hit hard in Wall Street's tech sell-off over its AI bet

#9

Post by causal »

hvb2 wrote: post #6
JCM9 wrote: post #3

I’m bullish on AI as tech but folks are starting to sniff out that the financials of everything going on at the moment aren’t sustainable for much longer. I hope we have more of a “reality correction” than full blown bubble bursting, but the data is increasingly looking like we’re about to have a massive implosion that wipes out a generation of startups and sets the VC ecosystem back a decade.

The tech is way underpriced right now. It's basically a subsidized market right now, with the money flowing in coming from the private sector. The problem here is that it remains to be seen who is willing to pay for the service once it's priced at cost or even with a margin. And based on valuations of AI companies one would expect a huge margin.

I wonder if a price correction would be a boon for open source, with the economics of smaller / self hosted models making a lot more sense when API prices have to surge.

Re: Oracle hit hard in Wall Street's tech sell-off over its AI bet

#10

Post by epistasis »

zerosizedweasle wrote: post #8

I said this earlier but: It's interesting to see the market try to do anything to rally. The problem is you guys are rallying on the thought that you've scared the Fed into cutting rates, but actually by rallying you short circuit it. You ensure they won't cut. And that's how the market's lillypad hopping thinking is actually just stupidity. You rallied, so now there are no rate cuts so the crash will be even more br…

It's hard to have collective action against rallying when overall most people benefit by a general upward trend.
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