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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

#111

Post by dchftcs »

re-thc wrote: post #64
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?

> I guess that makes some kind of sense? Oracle raises 4x the debt of e.g. Google? The problem is why is Oracle raising this debt? It's to do the buildout for OpenAI. So Oracle buys GPUs from Nvidia. Nvidia invests in OpenAI. OpenAI then pays Oracle for the GPUs. i.e. we're going around in circles.

The statement here that Nvidia invests in OpenAI is a bit misleading. Nvidia would pay out nothing to OpenAI if OpenAI turns out to be too poor to pay for capacity. So they are not that exposed to the death of OpenAI specifically. They would be more at risk of making too many GPUs to prepare for the deals.

Oracle takes a lot more risk, but in case OpenAI fails to grow quickly, it can still probably find buyers for its capacity in the next 5 years. There are many rich firms that will continue to invest in AI whether or not AI makes money.

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

#112

Post by hvb2 »

anoncareer0212 wrote: post #96
philipwhiuk wrote: post #89

Earlier quoted context omitted.

> It's not subsidized, lol. It's subsidised by VC funding. At some point the gravy train stops and they have to pivot to profit so that the VCs deliver return-on-investment. Look at Facebook shoving in adverts, Uber jacking up the price, etc. > I don't understand how you can be a software engineer and afford to have opinions like that I don't know how you can afford not to realise that there's a fixed value prop here…

This is all about OpenAI, not about AI being subsidized...with some sort of directive to copy/paste "OpenAI" for all the big AI providers? (presumably you meant s/OpenAI/$PROVIDER?) If that's what you meant: Google. Boom. Also, perhaps you're a bit new to industry, but that's how these things go. They burn a lot of capital building it out b/c they can always fire everyone and just serve at cost -- i.e. subsidizing bu…

You're replying to a story about a hyperscaler worrying investors about how much they're leveraging themselves for a small number of companies.

From the article: > OpenAI faces questions about how it plans to meet its commitments to spend $1.4tn on AI infrastructure over the next eight years.

Someone needs to pay for that 1.4 trillion, that's 2/3 of what Microsoft makes this year. If you think they'll make that from revenue, that's fine. I don't. And that's just the infra.

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

#113

Post by mr_toad »

zkmon wrote: post #66
lambersley wrote: post #32

Oracle was late to Cloud and now late to AI. Maybe it's time Larry let someone else take the helm.

It's not about being late. They don't need to get into those. Companies should stick to their identity once they settled somewhere, instead of becoming color-changing chameleon. Database is still very relevant tech and they missed a whole lot in that domain. Infact, if anything, world is even more dependent now on data and databases. Why did Oracle not rule this kingdom?

Letting Snowflake run off with half the data warehouse market does make it look like Oracle was asleep at the wheel.

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

#114

Post by causal »

anoncareer0212 wrote: post #93
causal wrote: post #90

Earlier quoted context omitted.

> It's not actually subsidized Source?

Source on it being subsidized? :) (there isn't one, other than an aggro subset of people lying to eachother that somehow literally everyone is losing money, while posting record profit margins) ( https://en.wikipedia.org/wiki/Hitchens%27s_razor )

If it's not profitable, it's running on capital. Subsidized.

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

#115

Post by conartist6 »

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.

And really the reason that it would be like that is that the models don't learn, per se, within their lifetime.

I'm told that each model is cashflow positive over its lifetime, which suggests that if the companies could just stop training new models the money would come raining down.

If they have to keep training new models though to keep pace with the changes in the world though then token costs would be only maybe 30% electricity and 70% model depreciation -- i.e. the costs of training the next generation of model so that model users don't become stranded 10 years in the past.

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

#116

Post by zer0tonin »

refulgentis wrote: post #91
theoldgreybeard wrote: post #87

Earlier quoted context omitted.

sam altman just needs another trillion dollars and then we'll finally have AGI and then the robots will do all the work and everyone will get a million dollars per year in UBI and everything will be perfect promise

If you're a greybeard, you would have lived this with many, many, companies, and I extremely doubt you'd be so fixated and angry as to mumble through a parody of what you perceive the counterargument as. Mine were Uber/Tesla, fwiw.

If you were an actual "greybeard" your references would be Pets.com and Worldcom. Those didn't end the same way as Uber/Tesla.

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

#117

Post by op00to »

foofoo12 wrote: post #69
dmix wrote: post #28

I'd be skeptical just because it's Oracle. Not exactly a sprightly company to bet on for novel technology.

Unfair. Oracle excels at some things, like extortion, blackmailing and litigation.

Had me in the first part!

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

#118

Post by lambersley »

zkmon wrote: post #66
lambersley wrote: post #32

Oracle was late to Cloud and now late to AI. Maybe it's time Larry let someone else take the helm.

It's not about being late. They don't need to get into those. Companies should stick to their identity once they settled somewhere, instead of becoming color-changing chameleon. Database is still very relevant tech and they missed a whole lot in that domain. Infact, if anything, world is even more dependent now on data and databases. Why did Oracle not rule this kingdom?

A software company who does not change the world, and/or change with the world, will die. The world is not dependent on Oracle DB though. Enterprises are chomping at the bits trying to get of Oracle DB. Evolution is brutal.

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

#119

Post by [deleted] »

neom wrote: post #19
chollida1 wrote: post #17

Its worse for some other "ai" related companies. Coreweave for instance, now has its CDS trade around 600bp, which is a 1/3 rise in 2 months, which implies that the probability of a default in 5 years is 40% at a 40 cent recovery rate. That makes Coreweave's credit rating the equivalent of CCC-, which aint good.

Yeah, and then the Canadian government handed hundreds of millions to the kids at Cohere who have now gone spent it on Coreweave. When it was all announced I was very very vocal that using an inexperienced startup for the sovereign compute capabilities seemed a very poor choice. I'm so curious to see how this all plays out.

[deleted]
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