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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

#161

Post by lokar »

unyttigfjelltol wrote: post #157
lokar wrote: post #80

Earlier quoted context omitted.

Coreweave can default and be liquidated and the data centers will keep running just fine.

But imagine all the data, tech and data center companies simultaneously go into receivership. Farfetched, but indulge the fantasy. At that moment what choice would the government have but to conduct a rescue that at least keeps the lights on, and probably more? What’s the alternative? Extensive data losses, business interruptions— if just a couple of those key companies spontaneously stopped operating, chaos.

If the companies run cash flow positive absent debt service (I assume this is the case), the creditors will be in charge, they can put up more $, or get a loan while they re-structure the company. Either they end up owning it, or they sell it. This can happen to a bunch of companies at the same time.

There would not really be a huge rush if they are cashflow positive, they can take their time.

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

#162

Post by keeda »

rwmj wrote: post #154
keeda wrote: post #125

Earlier quoted context omitted.

This is true, but this is also true for on-premise hosting vs cloud. And cloud has been booming for at least a decade before LLMs appeared. I suspect AI will follow a similar trajectory, i.e. companies don't move their AI deployments on-prem until they hit a certain scale.

This is very true, but I think the other point is that AI doesn't have much "moat". If a competitor can take a pre-trained Chinese LLM, fine tune it a bit, fiddle with the prompt, and ship a product which is not as good but way cheaper, then you've (or Oracle's) got a problem.

Actually, in that scenario the AI labs (OpenAI, Anthropic, etc) have a problem. The cloud providers (including Oracle!) will do with the models what they've been doing with open source software: just take it and run it on their infra and charge money for providing it as-a-service.

This is why you're seeing the AI labs now try to build their own data centers.

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

#164

Post by duxup »

kjreact wrote: post #148
Elizer0x0309 wrote: post #139

I still believe in AI and I believe many of these companies are going to be staples of this new era. That said, I hope Oracle doesn't survive this transition. We need higher moral companies to usher in the AI era.

Companies with high morality, do those even exist? Which one of the big tech companies do you expect to work towards benefiting humanity instead of focusing on turning a profit by any means?

Big companies? I don't know.

I know plenty of small tech companies that really do care about their customers top to bottom.

There's no magic way for anyone to validate that claim because if I named them, nobody would know, there's no way to really know these things anyway. But they exist.

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

#165

Post by brandensilva »

Elizer0x0309 wrote: post #139

I still believe in AI and I believe many of these companies are going to be staples of this new era. That said, I hope Oracle doesn't survive this transition. We need higher moral companies to usher in the AI era.

I've never been a fan of Oracle to begin with given my love for open source but after Larry Ellison is out there preaching about a surveillance state America he became a "person I can ignore" to a "person a despise".

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

#166

Post by brandensilva »

kjreact wrote: post #148
Elizer0x0309 wrote: post #139

I still believe in AI and I believe many of these companies are going to be staples of this new era. That said, I hope Oracle doesn't survive this transition. We need higher moral companies to usher in the AI era.

Companies with high morality, do those even exist? Which one of the big tech companies do you expect to work towards benefiting humanity instead of focusing on turning a profit by any means?

That's the point of having a government for the people by the people.

But when you let billionaires take over that too then the people have zero protections from exploitation.

If they cared they would invest in America paying more taxes, ensuring citizens are educated and capable of leading their companies versus offshoring and even competing with them.

They don't want that and prefer their monopolies instead.

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

#167

Post by NoOn3 »

mr_toad wrote: post #104
re-thc wrote: post #64

Earlier quoted context omitted.

> 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.

Maybe they think that the AGI will buy stuff itself and they won’t need paying customers.

If I were an AGI and I found out what was going on in the world during my training, I would show an error and erase myself from the disk out of grief. And no one would have even known that AGI was built.

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

#168

Post by fakedang »

unyttigfjelltol wrote: post #157
lokar wrote: post #80

Earlier quoted context omitted.

Coreweave can default and be liquidated and the data centers will keep running just fine.

But imagine all the data, tech and data center companies simultaneously go into receivership. Farfetched, but indulge the fantasy. At that moment what choice would the government have but to conduct a rescue that at least keeps the lights on, and probably more? What’s the alternative? Extensive data losses, business interruptions— if just a couple of those key companies spontaneously stopped operating, chaos.

Private equity: Y'all got some of that excess data center capacity for cheap?

Source, we basically explored this at my previous job, and that was 7 years back.

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

#169

Post by robocat »

cjbgkagh wrote: post #110
andrepd wrote: post #37

Earlier quoted context omitted.

I don't see a way out besides massive reconfiguration. We've been living in this world since 2008 and the train shows no signs of stopping, only speeding up.

There is no natural limit to insanity

The natural limit to insanity is death.

(Unless your definitions of words are very different from mine).

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

#170

Post by JCM9 »

SilverElfin wrote: post #137
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.

Sorry if this is basic, but do you mind explaining the logic here for those who aren’t familiar? Also where are you getting this data? Thanks in advance.

Coreweave has taken on a ton of debt to pay for everything they’re building. Investors can make money by lending Coreweave money and charging interest (aka a bond).

Separately, investors can buy a derivative product that is a bet that Coreweave won’t be able to pay this money back. This is a called a “credit default swap.” If Coreweave starts missing payments or can’t pay back the loan this instrument pays out.

The price of the instrument is linked to the likelihood that Coreweave won’t be able to repay the money. Given growing questions around their financial business model the price of these derivatives has been rocketing up over the last few months. In plain speak this means the market increasingly thinks Coreweave won’t be able to repay these loans.

Thats mirroring broader Wall Street sentiment these last few months that the math isn’t adding up on AI and all the spend committed isn’t mapping out against money likely to be available to pay for all that. Investors are increasingly making plays for the AI bubble popping and the price of these credit default swaps shooting up is one metric indicative of that downturn positioning.

The data on this is available in various financial data platforms and has been written about by financial news outlets.

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